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OECD NAMES 21 ‘GOLDEN PASSPORT’ COUNTRIES FOR HIDDEN ASSETS

Accountancy Daily on 16th October reported that the OECD has published a list of 21 countries which it says offer residence and citizenship by investment (CBI/RBI) options, or so-called ‘golden passport’ schemes, that can be used to hide assets held abroad from reporting under the common reporting standard (CRS).  It includes Malta, Cyprus and Monaco, as well as Montserrat, Panama, Qatar, Saint Kitts and Nevis, Saint Lucia, Seychelles, Turks and Caicos Islands, Antigua and Barbuda, the Bahamas, Bahrain, Barbados, Colombia, Dominica, Grenada, Malaysia, UAE, Mauritius and Vanuatu.  The OECD has raised the alarm about the fast-expanding $3 billion citizenship by investment industry.  The Guardian explains that, in exchange for donations to a sovereign trust fund, or investments in property or government bonds, foreign nationals can become citizens of countries in which they have never lived.  Other schemes, such as that operated by the UK, offer residency in exchange for sizable investments.  The report follows a Transparency International one that described how the EU had gained nearly 100,000 new residents and 6,000 new citizens in the past decade through poorly managed arrangements that were “shrouded in secrecy”.

https://www.accountancydaily.co/oecd-names-21-golden-passport-countries-hidden-assets

https://www.theguardian.com/business/2018/oct/16/tax-evasion-oecd-blacklist-of-21-countries-with-golden-passport-schemes-published

The OECD information, which includes the list of schemes and FAQ, is at –

https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/residence-citizenship-by-investment/

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 16

16th October 2018

PODCAST: SPOTLIGHT ON DENMARK

In the latest TRACE podcast, Anders Worsøe of the Magnusson firm in Copenhagen discusses Danish attitudes toward corruption and then looks at compliance and enforcement in Denmark.

https://www.traceinternational.org/bribe_swindle_or_steal

AUSTRALIA: DIRECTOR IDENTIFICATION NUMBERS – DRAFT LEGISLATION NOW OPEN FOR COMMENT

On 11th October, Holding Redlich published an article about the draft legislation to modernise and consolidate Australian business registers and to adopt a new system to create Director Identification Numbers (DIN) for company directors.  This move is intended to target phoenix activities, where company controllers shut down an existing entity and transfer its assets to a new company as a means to avoid debts and liabilities, leaving creditors out of pocket and estimated to cost the Australian economy over $3 billion each year.

http://www.holdingredlich.com.au/director-identification-numbers-c-c

FATF “UNLIKELY” TO UPGRADE THE EFFECTIVENESS OF BAHAMAS’ AML REGIME DESPITE IMPROVEMENTS

Tribune 242 in the Bahamas on 15th October reported the comments of the Central Bank’s inspector of banks and trust companies at a conference in Nassau that FATF is unlikely to grant the Bahamas “much improvement” despite major efforts to improve its anti-financial crime and terror financing regime.  He said that, with The Bahamas faring “worse than average” for effectiveness on a chart comparing the FATF mutual evaluation results for 50 countries, “We are in the middle of a re-evaluation process, and we have hopes that our technical compliance rating will improve”.  The Bahamas’ was found to have ‘low’ effectiveness in 6 out of 11 AML/CFT categories (the “Immediate Outcome” measures of effectiveness).

http://www.tribune242.com/news/2018/oct/15/bahamas-wont-see-major-upturn-over-anti-crime/

IMF AND WORLD BANK TO ASSIST MAURITIUS IN STRENGTHENING THE FINANCIAL SECTOR

All Africa on 15th October that the organisations will be present in Mauritius in December this year to assist the country in enhancing financial stability, facilitating access to finance and addressing risk management.  Talks with the World Bank included possible assistance on a well-designed centralised KYC in line with relevant norms and practices and using digitalised information system with high-level IT security and back-up system.  The possibility of guidance of the World Bank to improve the National Risk Assessment and on ways and means of improving Mauritius compliance with the FATF standards and requirements concerning AML/CFT was also examined.

https://allafrica.com/stories/201810150586.html

MALTA: AML COMMITTEE TO BE SET UP WITHIN MFSA

The Times of Malta on 15th October reported that amendments to legislation regulating the MFSA are being discussed in parliament which formally establish an Anti-Money-Laundering Committee and make various structural changes, such as the establishment of new directorates.  It is said that the proposed amendments met with the approval of an IMF delegation, whose proposals, where possible, had also been incorporated into the Bill.

https://www.timesofmalta.com/articles/view/20181015/local/anti-money-laundering-committee-to-be-set-up-within-mfsa.691691

NORWAY TO CLAMP DOWN ON SEAFOOD SMUGGLING

Customs Today on 15th October reported that the Norwegian government will increase efforts to combat smugglers, and consider more effective measures.  In 2018 so far over 4 tonnes has been discovered.  The hauls are mostly fish fillets, which means that much of the fish is wasted and the majority of the seizures are cod.

http://www.customstoday.com.pk/norway-to-clamp-down-on-seafood-smuggling-3/

PAKISTAN CUSTOMS ARRESTS IRAQI PASSENGER AND RECOVERS 7 FALCONS

Customs Today on 16th October reported that customs at Islamabad airport have arrested a Dubai-bound Iraqi passenger and recovered 7 falcons from his luggage.  Pakistan cannot issue export permits for falcons as this is not only against the local wildlife protection laws but also in violation of CITES and agreements signed by the country which ban export of rare species.

http://www.customstoday.com.pk/customs-niia-arrested-iraqi-passenger-recovers-7-falcons/

WORLD CUSTOMS ORGANISATION AND OSCE TO STRENGTHEN CO-OPERATION IN HELPING STATES TO ADDRESS SECURITY THREATS

On 16th October, the Organisation for security and Co-operation in Europe reported that the OSCE and WCO had agreed to deepen their co-operation in addressing emerging and evolving security threats under a Working Arrangement document.  The Working Arrangement covers different areas of mutual interest, such as supporting customs administrations in securing and facilitating legitimate trade; preventing and combating different forms of transnational organised crime, particularly the illicit trafficking in cultural objects; implementing different procedures and systems to strengthen security at borders, notably Advance Passenger Information (API) systems; as well as working together in other areas, such as gender mainstreaming, combating corruption and enhancing the professional integrity of customs staff.

https://www.osce.org/secretariat/399836

INDIA NEEDS WAIVER ON US SANCTIONS TO OPERATE CHABAHAR PORT; AND WILL ROUTE PAYMENTS THROUGH IRANIAN BANK

Money Control on 16th October reported that India and Iran’s strategic infrastructure investment in Chabahar Port would be successful at obtaining a waiver from the US from its economic sanctions on Iran, an official has said.  Iran and India entered into a contract in 2015 to construct 2 terminals at Chabahar Port along with cargo and container terminals.  The Iranian port would provide India an alternative and reliable access route into Afghanistan utilising India’s earlier investment in Zaranj-Delaram road built in Afghanistan.  India is also is looking at making payments in rupees once the US sanctions are in place as using the US dollar would not be feasible, using Bank Parasgad Iran (BPI), an Iranian private bank to route payments to Iran.

https://www.moneycontrol.com/news/business/india-needs-waiver-on-us-sanctions-to-operate-chabahar-port-will-route-payments-through-iranian-bank-official-3050931.html

MACAU CASINO SHARES DOWN 40% AS TRADE WAR DETERS CHINESE HIGH ROLLERS

The South China Morning Post on 16th October reported that China’s crackdown on corruption and investors’ fears over the impact of the trade war on the economy have sent the stock prices of Macau’s top 6 casinos tumbling an average of 40% since June.

https://www.scmp.com/business/companies/article/2168786/macau-casino-shares-down-40-cent-june-trade-war-deters-chinese

FRANCE: UKRAINIAN ‘KING OF THE CASTLE’ ARRESTED AND OVER €4 MILLION SEIZED

On 16th October, Europol reported that the French Gendarmerie arrested in Burgundy close to Dijon a high-profile fugitive from Ukraine who was living a lavish lifestyle in France. The suspect is thought to be behind a complex case of international fraud and money laundering. The seizures during the action day alone amount at over €4.6 million and include a castle, a vintage Rolls Royce Phantom and 3 works of art by Salvador Dali.  This followed an investigation on alleged suspicious transactions surrounding the purchase of a castle which was bought for €3 million by a Luxembourg company whose ultimate beneficial owner was a Ukrainian citizen suspected of corruption at a large scale in his country.

https://www.europol.europa.eu/newsroom/news/french-gendarmerie-arrest-ukrainian-‘king-of-castle’-and-seized-over-eur-4-million

UK: PREGABALIN AND GABAPENTIN TO BE CONTROLLED AS CLASS C DRUGS

The Home Office reported on 16th October that prescription drugs pregabalin and gabapentin are to be reclassified as Class C controlled substances from April 2019, meaning it will be illegal to possess pregabalin and gabapentin without a prescription and it will be illegal to supply or sell them to others.  The drugs, which are used to treat nerve pain, epilepsy and anxiety, can bring about an elevated mood in users but can also have serious side effects, particularly when used in combination with other drugs.

https://www.gov.uk/government/news/pregabalin-and-gabapentin-to-be-controlled-as-class-c-drugs

EU REVIEWS AND PLANS UPDATES OF IDENTITY DOCUMENT SECURITY

On 16th October. The EU issued a report on progress against a 2016 Action Plan to improve the security of ID documents in the EU.  It says that half the 32 proposed measures had been implemented.  In April, the Commission published a proposal to improve the security of ID cards and residence permits for EU citizens and their non-EU family members.  The EU-wide Schengen Information System will now include information on falsified travel documents.  The European Border and Coast Guard Agency’s Centre of Excellence for combating document fraud launched in February.  A new proposal is that Commission on the European Border and Coast Guard proposes to integrate the False and Authentic Documents Online system (FADO), a system for the exchange of information on genuine and false documents which until now was based on co-operation between Member States, would become part of the EU legal framework and be managed by the European Border and Coast Guard Agency.

https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/european-agenda-security/20181016_com-2018-696-report_en.pdf

SWEDISH ECONOMIC CRIME BODY SAYS IT HAS RECEIVED REPORT THAT NORDEA BREACHED MONEY LAUNDERING RULES

Reuters on 16th October reported that documents from Hermitage Capital Management purport to show that Nordic bank, Nordea, breached its responsibilities under AML laws.

https://uk.reuters.com/article/uk-nordea-moneylaundering/swedish-economic-crime-body-says-received-report-that-nordea-breached-money-laundering-rules-idUKKCN1MQ2F5

BANK FRAUD SUSPECT VINAY MITTAL EXTRADITED FROM INDONESIA TO INDIA

The Hindu on 16th October reported that industrialist Vinay Mittal, who was wanted by the Indian Central Bureau of Investigation for allegedly cheating banks, has been extradited from Indonesia to face trial in the cases pending against him.  Mittal and others are alleged in 2014 and 2016 to have cheated Corporation Bank and Punjab National Bank.

https://www.thehindu.com/news/national/bank-fraud-accused-vinay-mittal-extradited-from-indonesia/article25241375.ece

FORMER WESTMINSTER COUNCIL PENSIONS BOSS FOUND GUILTY OF £1 MILLION FRAUD

On 16th October, Public Sector Executive reported that a former employee of Westminster City Council has been found guilty of stealing nearly £1 million from the council pension fund.  Ian Woodall, the former interim head of pensions and investments at the council, was convicted of fraud by abuse of position and concealing criminal property at Southwark Crown Court.  He was a contractor at the council for approximately 3 years and was responsible for the day-to-day oversight of the council’s £1 billion pension fund.

http://www.publicsectorexecutive.com/Public-Sector-News/former-pension-fund-manager-of-westminster-council-found-guilty-of-1m-fraud

ZAMBIAN MINING GROUP SAYS TAX CHANGES WILL HIT MINERAL EXPLORATION

Reuters reported on 16th October that Zambia’s proposed mining tax increases will hit mineral exploration and production in Africa’s second biggest copper producer, according to companies involved in exploration.  Zambia plans to introduce new mining duties, replace VAT with sales tax and increase royalties to help bring down mounting debt.

https://af.reuters.com/article/zambiaNews/idAFL8N1WW4B9

ILLEGAL BLUEFIN TUNA MARKET MADE OVER €12 MILLION A YEAR SELLING FISH TO SPAIN

A news release from Europol on 16th October reported that Europol had co-ordinated the international Operation Tarantelo, conducted by the Spanish Guardia Civil with support of French, Italian, Maltese and Portuguese authorities, in which 79 individuals were arrested.  More than 80 tonnes of illicit Bluefin tuna were seized and it is estimated the network trafficked a volume of over 2.5 million kg a year.  Several poisoning cases were detected due to the unsanitary conditions in which the fish were stored.  The tuna business is often linked to other crimes such as food fraud or document fraud.

https://www.europol.europa.eu/newsroom/news/how-illegal-bluefin-tuna-market-made-over-eur-12-million-year-selling-fish-in-spain

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OFAC ADDS MANY IRAN SANCTIONS DESIGNATIONS AND AMENDS SANCTIONS LIST – TARGETS BASIJ RESISTANCE FORCE

On 16th October, OFAC added 20 new entities, including Bank Mellat, the Sina Bank and Parsian Bank, amended 2 entries, and deleted 7 previous entries (including former entries relating to the 3 banks) which were not subject to secondary sanctions under those listings.  The new sanctions measures are said to be to target a network of businesses providing financial support to the Basij Resistance Force (Basij), a paramilitary force subordinate to Iran’s Islamic Revolutionary Guard Corps (IRGC).

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20181016.aspx

https://home.treasury.gov/news/press-releases/sm524

BASIJ

 

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MARINE INSURANCE AND SANCTIONS

On 16th October, the European Sanctions Blog posted a report about a decision of the Commercial Court in the UK: Mamancochet Mining Ltd v Aegis Managing Agency Ltd & OthersThe court held that payment of a claim under a policy could be paid by the defendants, because payment would not expose the underwriters to EU or US sanctions on Iran if paid out before 4th November (when the latest US sanctions on Iran take effect) – and thus the “sanctions clause” in the policy did not apply.  Crucially, the Court said that “exposure” to sanctions meant that the payment had to breach sanctions as opposed to exposing insurers to a real risk of breach.  The court did not make a ruling on whether or not a refusal to pay such a claim might breach the EU Blocking Regulation (which seeks to prohibit compliance with the US sanctions and so protect EU businesses involved), but “saw force” in the argument that it would not – because the insurer was relying on the terms of the policy, and not merely complying with the sanctions requirement.

https://europeansanctions.com/

The court report is available at –

https://www.bailii.org/ew/cases/EWHC/Comm/2018/2643.html

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PADDY POWER BETFAIR FINED £2.2 MILLION FOR RAFT OF FAILINGS INCLUDING ALLOWING PUNTER TO GAMBLE MONEY STOLEN FROM A DOGS HOME

The Irish Examiner on 16th October reported that the UK Gambling Commission found “significant” amounts of stolen money had been gambled with Paddy Power’s online exchange Betfair after it failed to carry out proper AML checks.  The inquiry centred on 5 customers in 2016, including 2 who were allowed to gamble stolen money – one of whom had defrauded his employer, Birmingham Dogs Home – the money will be returned to the dogs home.

https://www.irishexaminer.com/breakingnews/business/–876118.html?src=ilaw

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UN ADDS 1 NEW NAME TO ISIL/DA’ESH/AL-QAIDA SANCTIONS LISTS

On 15th October, the UN advised that ANJEM CHOUDARY, a UK citizen jailed in the UK in 2014, had been added to sanctions lists on the recommendation of the relevant sanctions committee.

https://www.un.org/press/en/2018/sc13539.doc.htm

HM Treasury added him to UK sanctions lists on 16th October

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/748735/Notice_ISIL_16102018.pdf

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NEW EU SANCTIONS REGIME TO COMBAT THE PROLIFERATION AND USE OF CHEMICAL WEAPONS

EU Regulation 2018/1542/EU has formally created a new sanctions regime – a new EU regime of restrictive measures to address the use and proliferation of chemical weapons.  The sanctions may include travel restrictions and the freezing of funds and economic resources of certain persons, entities or bodies that are responsible for, provide financial, technical or material support for, or are otherwise involved in, manufacturing or using chemical weapons or engaging in preparations for the use of chemical weapons, as well as those who assist or encourage such activities.

See also Council Decision 2018/1544/CFSP.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2018.259.01.0012.01.ENG&toc=OJ:L:2018:259:TOC

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 15

15th October 2018

DO DATA POLICY RESTRICTIONS INHIBIT TRADE IN SERVICES?

A working paper from the European Centre for International Political Economy (ECIPE in October examines whether restrictive data policies impact trade in services over the internet.  It distinguishes between policies regulating the cross-border movement of data and policies regulating the domestic use of data.  It is said to show that strict data policies negatively and significantly impact imports of data-intense services.  This negative impact is stronger for countries with better developed digital networks.

http://ecipe.org/publications/do-data-policy-restrictions-inhibit-trade-in-services/

MALDIVES: YAMEEN’S DESPERATE MOVES TO STAY IN POWER

Eurasia Review on 15th October published an article which says that, after losing the election by an overwhelming margin and after conceding defeat publicly, President Yameen is said to now up to his old tricks to stay in power with the help of his former cronies in the Judiciary and the Security Forces.

http://www.eurasiareview.com/15102018-maldives-yameens-desperate-moves-to-stay-in-power-analysis

OFFSHORE WEALTH: LOOPHOLES FOUND IN EU ANTI-TAX EVASION RULES

The Guardian on 15th October published an article saying that European common reporting standards rules designed to make it harder for wealthy individuals and companies to hide their cash offshore have loopholes that mean foreign accounts can be kept secret from tax collectors, a report from the European Green party, shared with the Guardian, has warned.  It says that, as of June 2018, at least 43 countries were not committed to implementing the common reporting standard, including Montenegro, Serbia and Ukraine.  It points out 2 commonly used loopholes – setting up bank accounts in one of the 43 countries or in the US using a company name, or using “golden visas” to obtain citizenship.

https://www.theguardian.com/business/2018/oct/15/offshore-wealth-loopholes-found-eu-anti-tax-evasion-rules

HMRC BOSSES ‘BLACKLIST’ MORE THAN 150 PUBLIC FIGURES FOR HONOURS INCLUDING KNIGHTHOODS OVER TAX AVOIDANCE

The Daily Mail on 15th October reported that HMRC is said to alert the Cabinet Office when nominees are involved in controversial tax schemes, assigning them a rating of low, medium or high risk.  A freedom of information request has found that up to 43 people recommended for an honour have been flagged as red, or high risk, since January 2013.

https://www.dailymail.co.uk/news/article-6274917/Customs-bosses-blacklist-150-public-figures-Honours.html

NEW HUNGARIAN LEGISLATION ON NATIONAL SECURITY VETTING OF FOREIGN INVESTORS TO APPLY FROM 1ST JANUARY

Allen & Overy on 12th October published an article saying that the Hungarian Parliament adopted a new law – still awaiting Presidential sign-off and publication – which will require ministerial approval for foreign direct investment into specific sectors – defence, dual use products, cryptography and wire-tapping products, financial services, energy, government registries and the electronic communications sector.

http://www.allenovery.com/publications/en-gb/Pages/New-Hungarian-legislation-on-national-security-vetting-of-foreign-investors-to-apply-from-1-January-2019.aspx

CHEMICAL WEAPONS TREATY: TIME FOR CHEMICAL INDUSTRY TO STEP UP

The Bulletin of the Atomic Scientists on 12th October reported that the Organisation for the Prohibition of Chemical Weapons (OPCW) is preparing to move its focus from purely the disarmament of nation-states, to expand to include preventing terrorist groups and other “non-state actors” from acquiring chemical weapons — while also preventing the re-emergence of chemical weapons among states.  The article suggests the chemicals industry could help by funding the work of the OPCW.

https://thebulletin.org/2018/10/time-for-the-chemical-industry-to-step-up-to-the-plate/

TACKLING ILLEGAL WILDLIFE TRADE IN AFRICA: ECONOMIC INCENTIVES AND APPROACHES

Chatham House on 11th October published a paper saying that illegal wildlife trade (IWT) significantly impacts African economies by destroying and corroding natural, human and social capital stocks.  It argues that the economic value of African ecosystems is often under-recognised because they remain unquantified, partly due to the lack of available data on the broader economic costs of IWT.  Improved monitoring and evaluation with key performance indicators would help governments and citizens to appreciate the economic value of combating IWT.

https://www.chathamhouse.org/publication/tackling-illegal-wildlife-trade-africa-economic-incentives-and-approaches

SYRIA: HOW CHEMICAL WEAPONS HAVE HELPED BRING ASSAD CLOSE TO VICTORY

On 14th October, the BBC published a lengthy article about a joint investigation by BBC Panorama and BBC Arabic shows for the first time the extent to which chemical weapons have been crucial to his war-winning strategy.  It says use of chemical weapons has been widespread, with 106 attacks documented.

https://www.bbc.co.uk/news/world-middle-east-45586903

CBP

FORMER KREMLIN OFFICIAL “CHARGED WITH LUXURY WATCHES FRAUD”

The Moscow Times on 15th October reported that an active Russian security official and former Kremlin staffer has been reportedly charged with embezzling more than $300,000 from a luxury watch pawnbroker.  Mikhail Gorbatov, a Federal Security Service (FSB) colonel and the presidential administration’s former chief of monitoring and inspection, faces up to 2 years in prison.

https://themoscowtimes.com/news/former-kremlin-official-charged-with-luxury-watches-fraud-media-reports-63190

EX-CHIEF OF CHINA ASSET MANAGEMENT FIRM PROSECUTED FOR GRAFT
Channel News Asia on 15th October reported that Lai Xiaomin, chairman of the Hong Kong-listed China Huarong Asset Management Co, the former chairman of the Chinese state-controlled asset management firm will be prosecuted for corruption, authorities said, the latest senior figure to be felled in the government’s anti-corruption dragnet.

https://www.channelnewsasia.com/news/business/ex-chief-of-china-asset-management-firm-prosecuted-for-graft-10828728

SPAIN SET FOR CLAMPDOWN ON GAMBLING ADS

iGaming Business on 15th October reported that tougher advertising rules imposed by the Spanish government, similar to those placed on tobacco, may be included in the country’s 2019 Budget.  In 2005, Spain introduced regulations that prohibit the sponsorship of tobacco products, as well as all kinds of advertising and promotion in the media, with a handful of exceptions.  This would follow a blanket ban on advertising of gambling in Italy earlier this year.

http://www.igamingbusiness.com/news/spain-set-clampdown-gambling-ads

POLICE RECORD LARGEST-EVER BUST OF DRUGS SMUGGLED INTO SOUTH KOREA

The Yonhap News Agency on 15th October reported that the scheme involved Taiwanese and Japanese organised crime and Korean dealers.  6 people were arrested in the attempted trafficking of 112 kg of methamphetamine, according to police, estimated to be worth $326.56 million.

http://english.yonhapnews.co.kr/news/2018/10/15/0200000000AEN20181015005751315.html?input=rss

90% OF MAJOR EUROPEAN BANKS ALREADY SANCTIONED FOR MONEY LAUNDERING

EurActiv on 15th October reported that, according to a British report, 18 of the 20 leading European banks have already been sanctioned for money laundering offences over the past decade.  It says that the huge scandal which recently rocked Danske Bank highlighted the deficiencies in money laundering checks. This problem is not unique to this Danish bank but concerns the entire European banking sector at various levels.

https://www.euractiv.com/section/economy-jobs/news/90-des-grandes-banques-europeennes-deja-sanctionnees-pour-blanchiment/

FRENCH PROSECUTOR RECOMMENDS DROPPING CHARGES AGAINST SENIOR RWANDAN OFFICIALS

Defence Web on 15th October reported that a French prosecutor has recommended dropping charges against 8 senior Rwandan officials, including the defence minister, being investigated over the death of President Juvenal Habyarimana in 1994 – the act that sparked the genocide in the country.  The probe, started in France in 1998 following demands by relatives of the French crew who died in the air crash.

http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=53433:drop-charges-against-senior-rwandan-officials–french-prosecutor&catid=56:diplomacy-a-peace&Itemid=111

https://www.jurist.org/news/2018/10/france-prosecutors-move-to-dismiss-rwanda-genocide-charges/

 

UK PUBLIC SECTOR COUNTER FRAUD PROFESSION

There are 10 Core Disciplines and 5 Sub-Disciplines in the counter fraud framework:

UK1

Each discipline (in this example, Investigation) breaks down into Key Components, and then individual Elements, against which members can assess themselves:

UK2

https://quarterly.blog.gov.uk/2018/10/15/we-need-to-talk-about-fraud/

CYPRUS: MAN ARRESTED IN BELGIAN MATCH-FIXING CASE APPEALS EXTRADITION

The Cyprus Mail on 15th October reported that a 52-year-old man, a national of another European country and a holder of a Cypriot passport who has been living in Cyprus for the past 20 years, who was arrested in Cyprus as part of a major investigation by Belgian authorities into financial fraud and possible match-fixing, is challenging his extradition to Belgium.

https://cyprus-mail.com/2018/10/15/man-arrested-for-belgian-match-fixing-appeals-extradition

BAHAMAS IMMIGRATION FRAUD CASE ILLUSTRATES TOUGH US ENFORCEMENT PROBLEMS

On 15th October, an article from the US-based Center for Immigration Studies posed the question: how does US law enforcement tackle immigration fraud happening in another country without seeking the co-operation of that nation’s officials — on the apparent grounds that some of them are not trustworthy?  It then seeks to answer using evidence from 2 documents filed in the federal courts in the District of Columbia, dealing with the arrest of an alleged Bahamian fraudster.  The would-be migrants to the US were 4 Haitians living in the Bahamas and 1 Bahamian.

https://cis.org/North/Bahamas-Immigration-Fraud-Case-Illustrates-Tough-Enforcement-Problems

HOW A MAJOR WESTERN BANK ENABLED A SUSPECTED RUSSIAN MONEY LAUNDERER

On 15th October, Buzz Feed published an article about how documents show how in 2012 the bank loaned $3 million to a company linked with Cyprus and connected to Russian tax fraud and later linked to the special counsel’s investigation – despite the fact that its owner had been fined after an Israeli money laundering investigation and suspicions that the company was a beneficiary of the largest tax fraud in Russian history.  The details are coming to light as a result of the investigation into suspected Russian interference in the 2016 US election.

https://www.buzzfeednews.com/article/azeenghorayshi/prevezon-mueller-investigation-td-bank

BAHAMAS CENTRAL BANK OUTLINES STEPS TAKEN TO INCREASE CORRESPONDENT BANK COMFORT WITH BAHAMIAN RISK

The Nassau Guardian on 15th October reported that the Central Bank of The Bahamas (CBOB) is making it easier for correspondent banks to track the positive and negative developments of local banks, by providing more access to public information and private information flows.  It is also said that CBOB will soon produce the first in an annual series of publications that will summarise AML/CFT risk management in The Bahamas, and that by next year, a website with archives and news sources on matters relating to Bahamian AML/CFT risk will be launched.

https://thenassauguardian.com/2018/10/15/central-bank-outlines-steps-taken-to-increase-correspondent-bank-comfort-with-bahamian-risk

ALGERIA: 5 GENERALS BEHIND BARS ON CORRUPTION CHARGES

Asharq Al-Awsat reported on 15th October that the military court in Algeria has imprisoned 5 top military members, who were dismissed for alleged corruption and bribery, charged with “illicit enrichment” and “use of a senior officer’s function for personal purposes”.

https://aawsat.com/english/home/article/1427186/algerian-army-five-generals-behind-bars-corruption-charges

RICIN AND THE THREAT IT POSES

A post from Bellingcat on 15th October is intended to provide an overview of ricin and the threat it poses.  Ricin has been used or implicated in many criminal and/or terrorist cases, including this year.  The post explains that ricin is a toxin and is naturally occurring, found in castor beans and it takes its name from the botanical name (ricinus communis) of the castor bean plant.  Ricin can be found as a by-product of the manufacture of castor beans.  In fact, the mash that is left over after processing castor beans has a reasonably high ricin content.  In its pure form, ricin is a powder. Ricin can be injected, inhaled, and absorbed through the eyes.  Unlike nerve agents, ricin does not readily absorb through the skin, so merely handling the powder is not as dangerous as breathing it or ingesting it.  Ricin is covered by both the Chemical Weapons Convention and the earlier, broader Biological and Toxin Weapons Convention and, technically, is or can be classified as a WMD.

https://www.bellingcat.com/resources/2018/10/15/use-of-ricin-is-this-amateur-hour/

FDA WARNS CHINESE VAPING FIRM OF STIFF CONSEQUENCES FOR ADDING VIAGRA TO E-CIG LIQUID

Illicit Trade on 15th October reported that the US Food and Drug Administration (FDA) has told a Chinese electronic cigarette manufacturer, HelloCig Electronic Technology, not to sell vaping juice laced with erectile dysfunction drugs such as Viagra and Cialis – threatening it with “stiff” penalties(!).

https://www.illicit-trade.com/2018/10/fda-warns-chinese-vaping-firm-of-stiff-consequences-for-adding-viagra-to-e-cig-liquid/

SCOTTISH POLICE LAUNCH CRACKDOWN ON MODERN SLAVERY AND HUMAN TRAFFICKING

Illicit Trade on 15th October reported that Police in Scotland have launched a new campaign to raise awareness of human trafficking, modern slavery and sexual exploitation.  Launching the campaign this morning, the force revealed that 44 women and 2 men have identified themselves as victims of trafficking in Scotland for the purposes of sexual exploitation since the beginning of this year, 7 of whom were girls under the age of 18.

https://www.illicit-trade.com/2018/10/scottish-police-launch-crackdown-on-modern-slavery-and-human-trafficking/

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PANAMA SECURITY OFFICIALS IMPLICATED IN INTERNATIONAL ARMS TRAFFICKING NETWORK

Insight Crime on 15th October reported that authorities in Panama are asking the US for assistance in investigating an international arms trafficking network that may have included the participation of former security officials, raising questions about the country’s role in the regional arms trafficking trade.  The case implicates several former officials from the Central American nation’s Public Security Directorate (Dirección Institucional de Asuntos de Seguridad Pública – DIASP).  Authorities are said to be investigating 9 individuals, 8 of whom are former DIASP officials, for their alleged role in importing 100 weapons into Panama after they were purchased in the US.  It says that, in 2006, UNODC found that Panama acts as the “principal port of entry” for illicit firearms from the US and Central America that are traveling into Colombia.

https://www.insightcrime.org/news/brief/panama-security-officials-international-arms-trafficking/

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US JUSTICE DEPARTMENT DESIGNATES MS-13 AND HEZBOLLAH AND 3 OTHERS GROUPS AS TRANSNATIONAL CRIME GROUPS

The Washington Examiner and others on 15th October reported that the DoJ has designated 5 groups – MS-13 and Lebanese Hezbollah, Cartel de Jalisco Nueva Generación, the Sinaloa Cartel, and Clan del Golfo – as transnational crime groups, making the groups among the highest priority of law enforcement.  The DoJ has also formed a task force to tackle the groups, and will present the Attorney General with specific recommendations within 90 days.

https://www.washingtonexaminer.com/news/doj-designates-ms-13-hezbollah-as-transnational-crime-groups

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CHEMICAL WEAPONS: EU COUNCIL ADOPTS A NEW SANCTIONS REGIME

An EU news release on 15th October announced that the EU Council had decided to adopt a new regime of restrictive measures to address the use and proliferation of chemical weapons – to impose sanctions:

  • On persons and entities involved in the development and use of chemical weapons anywhere, regardless of their nationality and location; and
  • To target persons and entities who are directly responsible for the development and use of chemical weapons as well as those who provide financial, technical or material support, and those who assist, encourage or are associated with them.

Sanctions are to involve a travel ban on entering the EU and an asset freeze for persons, and an asset freeze for entities.  In addition, EU persons and entities would be forbidden from making funds available to those listed.

https://www.consilium.europa.eu/en/press/press-releases/2018/10/15/chemical-weapons-the-council-adopts-a-new-sanctions-regime/pdf

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ANTIGUA & BARBUDA AML/CFT MUTUAL EVALUATION REPORT

On 15th October, FATF published the mutual evaluation report following an on-site visit by the CFTAF in June 2017.   Amongst its key findings were that –

  • The co-operation co-ordination mechanisms are not being fully utilised by the domestic competent authorities to develop evidence and trace criminal proceeds related to money laundering, predicate offences and terrorist financing leading to confiscation;
  • “Fit and proper” requirements for licensed entities are not employed consistently;
  • There are no licensing requirements for a number of sectors, including high-value dealers, estate and travel agencies;
  • AML/CFT supervision is not consistent across the DNFBP sector;
  • Examinations by authorities are rules-based rather than on a risk-based approach
  • Requirements to identify ultimate beneficial owners are not applied to International Business Companies and other legal persons;
  • The quality and levels of SAR reported by financial institutions and particularly by DNFBP is low; and
  • Financial institutions and DNFBP do not consistency refuse business where CDD information is incomplete. EDD and mitigation measures for PEP and other high-risk customers are not consistently applied.

http://www.fatf-gafi.org/publications/mutualevaluations/documents/mer-antigua-barbuda-2018.html

mer1

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In addition –

FATF SCHEDULE OF MUTUAL EVALUATION ASSESSMENT RESULTS UPDATED

http://www.fatf-gafi.org/publications/mutualevaluations/documents/assessment-ratings.html

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US: CARGO SHIPS STOPPING IN IRAQ MAY BE DENIED ENTRY

Sandler Travis Rosenberg on 15th October reported that from 26th October the US Coast Guard will impose certain conditions of entry on all vessels that visited any port in Iraq (with 3 exceptions) in their last 5 port calls. Any vessel that does not meet these conditions may be denied entry into the US – because it has determined that the affected ports in Iraq are not maintaining effective anti-terrorism measures  and that Iraq’s designated authority’s oversight, access control, security monitoring, security training programs, and security plans, drills, and exercises are all deficient.

https://www.strtrade.com/news-publications-cargo-ship-Iraq-conditions-entry-101518.html

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9 SINGAPORE ARMED FORCES (SAF) ARMOURED VEHICLES SEIZED IN HONG KONG WERE LABELLED AS CIVILIAN VEHICLES AND DID NOT HAVE THE REQUIRED LICENCE

Customs Today on 13th October reported that the Singapore Armed Forces (SAF) armoured vehicles worth S$24 million that were seized in Hong Kong in 2016 were labelled as civilian vehicles and did not have the required licence, a district court in Hong Kong has heard in a the criminal trial against shipping firm APL and the ship captain.  The infantry carriers were being taken back to Singapore after a military exercise in Taiwan.

http://www.customstoday.com.pk/hong-kong-court-told-seized-saf-terrexes-were-listed-as-civilian-vehicles-1-of-2/

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 14

14th October 2018

ZIMBABWE: ZANU-PF ‘SMUGGLED’ MONEY TO CHINA FOR ELECTION REGALIA

On 13th October, Bulawayo 24 reported that the ruling Zanu-PF party claims that the US tried to sabotage its campaign by blocking them from wiring their transaction to a Chinese company which printed the party’s regalia – t-shirts, caps, scarfs and wrapping cloth – until the party sought ways of circumventing the restrictions and get the money to China without detection.  A politburo member claimed that the US tried to sabotage and derail the Zanu-PF campaign by making sure that the payment to China failed.

https://bulawayo24.com/index-id-news-sc-national-byo-147361.html

CALIFORNIA SUCCULENTS ARE AT THE CENTRE OF A MASSIVE SMUGGLING RING

MNN.com on 13th October reported that several varieties can fetch millions on the black market in East Asia.  It says that plant smugglers from China and Korea are raping and pillaging fragile California coastal habitats, in some cases rappelling down ocean-facing cliffs to poach native succulents and ship them to Asia, particularly Korea, where housewives place them on windowsills as status symbols.

https://www.mnn.com/your-home/organic-farming-gardening/stories/succulent-smuggling-ring-california-dudleya

PHILIPPINES: BANKS TOLD TO CONSIDER NRA DATA IN RISK REVIEW

Manila Bulletin on 13th October reported that the central bank said all banks’ risk review processes should include the National Risk Assessment (NRA) on money laundering and terrorist financing (ML/TF) for a comprehensive evaluation of financing risks.  The central bank, CSP, The BSP is part of the NRA Working Group through the Anti-Money Laundering Council (AMLC).  The inter agency-NRA is one of the FATF recommendations to enhance AML enforcement.

https://business.mb.com.ph/2018/10/13/banks-told-to-consider-nra-data-in-risk-review/

AML COMPLIANCE COSTS US FINANCIAL SERVICES FIRMS $25.3 BILLION PER YEAR

The latest edition of the ACFCS Newsletter on 13th October reported that the cost of AML compliance across US financial services firms equalled $25.3 billion per year based on survey responses from more than 150 decision-makers at banks, investment, asset management and insurance firms, according to LexisNexis Risk Solutions in its inaugural 2018 True Cost of AML Compliance report for the US.  The report says that smaller firms are hit hardest, relative to their bottom lines, as the cost of AML compliance reaches up to 0.83% of total of assets, compared to larger firms, which see costs up to 0.08%.

https://www.acfcs.org/news/422560/Financial-Crime-Wave–U.S.-compliance-costs-surpass-25-billion-EU-U.K.-AML-fines-and-more.htm

HOW AN HSBC TELLER STOPPED A $500 MILLION BANK HEIST

The latest edition of the ACFCS Newsletter on 13th October reported that the alleged attempted theft is a complex, convoluted tale that involves Angolan political and financial authorities, missed SWIFT signals, forged paperwork, a get-rich-quick scheme and a small cast of international characters.

https://www.acfcs.org/news/422560/Financial-Crime-Wave–U.S.-compliance-costs-surpass-25-billion-EU-U.K.-AML-fines-and-more.htm

EXPOSED: INTERNATIONAL MONEY LAUNDERING SYNDICATE IN NAIROBI

The Daily Nation on 14th October carried an article saying that a suspected international money laundering syndicate involving Chinese nationals has been operating in Nairobi targeting businesses.  The scam involves credit cards believed to have been stolen or cloned from leading companies in China, and a Chinese arriving in Kenya with multiple credit cards belonging to one or several leading companies operating in either mainland China or Hong Kong.  They then approach a Kenyan business owner, preferably those whose daily turnover is in hundreds of thousands, and whose clients prefer to pay using credit or debit cards.  Alternatively, these business people could be owners of establishments, such as high-end hotels and luxury resorts, whose main clientele are foreigners who prefer using plastic cash as opposed to hard cash.  After running the credit card, the Kenyan businessman then leaves his card machine with the Chinese as collateral – and when the money reaches the account, the Kenyan businessman then withdraws it and shares it with the Chinese getting the bigger share.  The article says that Africa has emerged as the last frontier for Chinese scammers who are unable to carry out their schemes in China, Europe or the US.

https://www.nation.co.ke/news/Exposed–International-money-laundering-syndicate-in-Nairobi/1056-4805004-tmhukdz/

MOBILE MONEY TRANSFERS HAVE TAKEN OFF IN SOMALIA, BUT THERE ARE RISKS

eNCA on 13th October reported that a recent World Bank report showed that Somalia has one of the most active mobile money markets in the world, outpacing most other countries in Africa, and now it has superseded the use of cash in the country – mobile money transactions are worth about $2.7 billion a month in a country which lacks a strong formal banking system.  It says that Somalia’s transfers are mainly available in US dollars.  The companies offering mobile money services are mobile network operators, as in Kenya, but they are increasingly forming part of large conglomerates that also offer banking and money transfer services.  It says that about 9 out of 10 Somalis over the age of 16 own a mobile phone.  Mobile money also facilitates vast remittance flows which are critical to most Somali households.  However, it is also vulnerable to money laundering and terrorism financing, because there is a weak KYC compliance, meaning few SIM cards and mobile money accounts are registered using a valid form of identification and ultimately, this results in limited accountability and tractability.

https://www.enca.com/business/mobile-money-transfers-have-taken-somalia-there-are-risks

UN HEARS THAT BOUNDARIES BETWEEN CRIME AND TERROR ARE BLURRING

Defence Web on 12th October reported that the evolving nexus between crime and terrorism, ranging from street level deals to complex symbiotic relationships, demands greater understanding to break the illicit flow of black market cash across borders a UN meeting has been told.  Terror groups are becoming increasingly-involved in “lucrative” criminal activities such as trading in natural resources and human trafficking, the Executive Director of the UN Counter-Terrorism Committee Executive Directorate (CTED), told the UN Security Council.  Criminal groups also join hands with terrorists and provide services such as counterfeiting, arms dealing and helping smuggle terrorists from one country to another, she said.

http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=53411:boundaries-between-crime-and-terror-are-blurring-un-hears&catid=56:diplomacy-a-peace&Itemid=111

DANISH POLICE HUNT CIVIL SERVANT SUSPECTED OF EMBEZZLING £15 MILLION MEANT FOR UNDERPRIVILEGED GROUPS

The Guardian on 11th October reported that Danish police have launched an international search for an unnamed 64-year-old “trusted and longstanding welfare agency” civil servant who they believe has left the country after taking more than 110m kroner of public money meant for social services.  The suspect had worked for the agency for 40 years before being fired in September, and had acquired “superuser” status, giving her high-level access to computer systems.

https://www.theguardian.com/world/2018/oct/11/danish-police-hunt-civil-servant-suspected-of-embezzling-13m

THE WESTMINSTER CITY COUNCIL SCANDAL: HOW DOES THE BRIBERY ACT 2010 APPLY TO GIFTS AND HOSPITALITY IN PRACTICE?

On 12th October, law firm Corker Bining published an article commenting on an internal report by the Council on a report about gifts and hospitality provided to the chairman of its planning committee by property firms involved in half of the planning applications his committee ruled on in 2016.  The report concludes that the “acceptance of a large number of gifts and hospitality is not in itself unlawful”, and the author of the article remarks that this is an odd conclusion.  The article says that it raises an important question: how is the Bribery Act’s application to gifts and hospitality being implemented in practice, some 7 years after the legislation came into force?

https://www.corkerbinning.com/the-westminster-city-council-scandal-how-does-the-bribery-act-2010-apply-to-gifts-and-hospitality-in-practice/

US TERROR SNAPSHOT SHOWS “HOMEGROWN” ISLAMIST EXTREMISM IN US CONTINUES TO BE CAUSE FOR CONCERN

Homeland Preparedness on 8th October reported that released the October Terror Threat Snapshot from the House Homeland Security Committee, highlights that 159 homegrown Jihadist cases in 30 states have been uncovered since 2013.  The cases included plots to attack the country, overseas travel, financial support, lying to authorities, and weapons charges.

https://homelandprepnews.com/stories/30773-terror-snapshot-shows-homegrown-islamist-extremism-in-us-continues-to-be-cause-for-concern/

US: CHINESE OPERATIVE CHARGED WITH ESPIONAGE AND STEALING TRADE SECRETS

Homeland Preparedness on 12th October reported that Yanjun Xu (aka Qu Hui and Zhang Hui), a deputy division director of the Chinese Ministry of State Security (MSS), was extradited to the US from Belgium and was charged with conspiring and attempting to commit economic espionage and stealing trade secrets from multiple US aerospace and aviation companies.

https://homelandprepnews.com/stories/30863-chinese-operative-charged-with-espionage-stealing-trade-secrets/

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DUTCH PROSECUTORS ASK FOR 4-YEAR SENTENCE FOR GAMBLING COMPANY CEO

Calvin Ayre on 13th October reported that the former CEO of slots developer, Sheriff Gaming, faces 4 years in prison if convicted on charges of illegal gambling, money laundering and tax evasion.  Stijn Flapper has appeared in court with brothers Maurice and Michel Gregoire, facing charges related to now defunct Sheriff Gaming and its parent company Bubble Group NV and a €100 million illegal online gambling operation led by the accused, using 7 Costa Rica sites to launder money from other illegal activities, including drug trafficking, and having products designed not to pay out jackpots – except to “family and friends” of the accused.

https://calvinayre.com/2018/10/13/business/sheriff-gaming-ceo-court-case/

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 13

13th October 2018

MASSIVE HAUL OF CIGARETTES AND TOBACCO SEIZED FROM HUSBAND AND WIFE AT BRISTOL AIRPORT

Bristol Live on 12th October reported on a husband and wife who arrived with 11,000 king size cigarettes and 140.5 kg of tobacco on a flight from Tenerife, 561 times more tobacco and 54 times more of cigarettes than allowed.

https://www.bristolpost.co.uk/news/bristol-news/bristol-airport-customs-tobacco-cigarettes-2100348

FCA FINDS E-MONEY FIRMS HAVE EFFECTIVE AML CONTROLS

On 12th October, Shearman & Sterling published an article saying that the FCA has issued a report on the outcome of its thematic review into money laundering and terrorist financing risks in the e-money sector; which focuses on e-money products, including prepaid cards and digital wallets. The AML/CFT controls of 13 authorized e-money institutions and registered small electronic money institutions – but not activities that are not regulated by the FCA or money remittance services.  It found that the majority had effective AML/CFT controls in place.

The report is at –

https://www.fca.org.uk/publication/thematic-reviews/tr18-3.pdf

https://www.jdsupra.com/legalnews/uk-regulator-finds-e-money-firms-have-99722/

NORWAY’S FINANCIAL REGULATOR PROVIDES DETAILS ON REGISTRATION PROCEDURE FOR VIRTUAL CURRENCY BUSINESSES

The Finance Feeds blog on 12th October reported that Norway’s Financial Supervisory Authority has updated its guidance to virtual currency businesses regarding the implementation of the new AML rules which will also apply to virtual currency exchange businesses.  There will be a transitional period, with the registration deadline being January 15th.

https://financefeeds.com/norways-financial-regulator-provides-details-registration-procedure-virtual-currency-businesses/

ANTIGUA-BARBUDA ECONOMIC ENVOY REJECTS MONEY LAUNDERING CLAIM

Caribbean News Now on 12th October reported that a diplomatic passport holder for Antigua and Barbuda, Alex Nain Saab Morán, appointed as an “economic envoy” 4 years ago, has confirmed that 2 former employees of a company in which he was a partner, and which closed 10 years ago, have been arrested by Colombian authorities for alleged money laundering and fraud, but said that he expects them to be released shortly since the charges are not sustainable.

https://www.caribbeannewsnow.com/2018/10/12/antigua-barbuda-economic-envoy-rejects-money-laundering-claim/

NEW ZEALAND: WOMAN AT FINANCIAL SERVICE COMPANY ACCUSED OF LAUNDERING $300,000 COCAINE MONEY

Stuff on 12th October reported the story of Qiannan Tang, a marketing manager at a financial services company, MCM Group, where her role also involved processing overseas money transfers, is accused of laundering more than $318,000 of drug money between December 2016 and March 2017 to overseas bank accounts.

https://www.stuff.co.nz/business/107791901/Woman-accused-of-laundering-300-000-cocaine-money-pleads-innocence

KUWAIT INVESTMENT FUND RAISES ALARM OVER ALLEGED ATTEMPT TO SEIZE $500 MILLION FROZEN IN DUBAI BANK

Forbes on 12th October reported that a Kuwaiti investment fund is calling on the Kuwaiti government to clarify its position over close to $500 million of the fund’s assets in a Dubai bank, after growing concern about possible efforts by some Kuwaiti individuals to seize the money.  The money from The Port Fund was frozen while being transferred through Noor Bank in Dubai in November at the request of the Kuwaiti authorities.  The situation followed the jailing in Kuwait of Russian businesswoman Marsha Lazareva, managing director of KGL Investment (KGLI), which sponsored The Port Fund with allegations of corruption and embezzlement.

https://www.forbes.com/sites/dominicdudley/2018/10/12/kuwait-investment-fund-alarm-funds-frozen-dubai/#1e059c8367a9

FLORIDA CHEQUE-CASHER GUILTY OF LAUNDERING $100 MILLION

WPTV in Florida on 12th October reported that Evelio Suarez, 53, a South Florida cheque-casher had pleaded guilty to laundering cash from identity theft, health care and mortgage fraud 2013-2015.  She is said to have controlled a chain of cheque-cashing stores

https://www.wptv.com/news/state/check-casher-guilty-of-laundering-over-100-million

KENYA’S EX-SPORTS MINISTER TO BE CHARGED OVER RIO OLYMPICS GRAFT

Reuters reported on 13th October that Kenya’s former sports minister will be charged in relation to the siphoning of funds meant for athletes who competed in the 2016 Olympics in Brazil.  Hassan Wario, the sports minister at the time, and 5 other former senior officials have faced allegations.

https://af.reuters.com/article/topNews/idAFKCN1MN0I0-OZATP

THERANOS CRIMINAL CASE SAID TO BE BROADER THAN DISCLOSED
The Economic Times in India reported on 13th October that the case involving Theranos, the now-defunct blood-testing start-up, could be bigger than was first thought.  The company was once valued at as much as $9 billion but collapsed amid what prosecutors describe as a massive fraud masterminded by CEO Elizabeth Holmes and former company president Ramesh “Sunny” Balwani to dupe investors, doctors and patients.  Holmes settled a SEC civil suit, while Balwani continues to fight the SEC.

https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/theranos-criminal-case-is-broader-than-disclosed-us-says/articleshow/66191879

AL-QAEDA AFFILIATE REPORTEDLY USING IRAN AS TRANSIT POINT FOR BANNED EXPORTS OF SOMALI CHARCOAL

Rferl on 13th October reported that an Al-Qaeda-linked militant group is using Iran as its main transit point for illegal charcoal exports from Somalia, enabling the group to earn millions of dollars in profits, a report from a UN sanctions committee claims.

https://www.rferl.org/a/al-qaeda-affiliate-al-shabaab-somlia-reportedly-using-iran-transit-point-illegal-charcoal-shipments-earning-millions-dollars/29541307.html

 

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THE UN ARMS TRADE TREATY AND DRONES

The Stimson Center in the US has published in August a book containing an analysis of how drones relate to various international regulatory regimes.  This report offers a particular focus on the international Arms Trade Treaty (ATT) and examines the ways in which drone transfers and use are regulated by the ATT.  For the purposes of this paper, references to drone(s), unmanned aircraft, and unmanned aerial vehicle(s), or UAV, will be made interchangeably.  It says that UAV, more commonly referred to as drones, have become a mainstay of military operations around the world.  They can be fitted with, or used as, weapons, or used as surveillance or reconnaissance types with cameras, sensors or sophisticated electronics.  Governments may be more willing to resort to the use of lethal force via armed drones, thereby lowering the threshold for engaging in armed conflict.  It says that new technological developments – focused on miniaturising and swarming, for example – may lead to an expansion of demand and of drone capabilities.  These new technological developments may also present additional challenges related to use and control.  Regardless of their type, as drones continue to proliferate around the world, it will be important for States to assess the impact of increasing drone use and understand the mechanisms in place that regulate the transfer and use of drones.  The report explains that the ATT is the first treaty to establish legally binding standards for regulating the global trade in conventional weapons.  The ATT was adopted by the UN General Assembly in April 2013, entered into force in December 2014, and aims to increase transparency and promote responsibility and accountability in international arms transfer decisions.  The ATT covers 8 categories of conventional weapons: battle tanks, armoured combat vehicles, large-calibre artillery systems, combat aircraft, attack helicopters, warships, missiles and missile launchers, and small arms and light weapons.  Though the text of the ATT does not provide definitions for these categories of weapons, Article 5.3 requires that national definitions of these weapons systems “not cover less than the descriptions used in the UN Register of Conventional Arms” at the time of the treaty’s entry into force.  It argues that, although the ATT does not explicitly reference drones within its scope, the treaty does implicitly apply to drones.  53 UN Member States, including the US, had signed up to the declaration and agreed to begin a process to develop global standards on export and subsequent use of armed drones, and the US led a small group of states to build on the joint declaration and draft more detailed, politically-binding standards for the transfer and use of drones.  However, these efforts have stalled in the first 18 months of the Trump administration.

https://www.stimson.org/sites/default/files/file-attachments/Stimson_The%20Arms%20Trade%20Treaty%20and%20Drones_August%202018.pdf

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PANAMA DUAL-USE EXPORTS REGULATION

PANAMA DUAL-USE EXPORTS REGULATION

 In this paper I set out to consider the introduction of strategic trade controls in and by the Republic of Panama, for the purposes of non-proliferation, and the adoption of the EU list of dual-use items and establishment of a national register of businesses and facilities involved in the handling of dual-use items in Panama.  I also consider the role of, or connection to, various other documents and sources of information and guidance – including the national risk assessment published in 2017, the 2018 mutual evaluation of Panama against FATF standards, the stated purposes of UN Security Council Resolution 1540 and the UN’s 1540 Committee, the Action Plan submitted to the 1540 Committee by Panama in 2017, and the guidance on the implementation of strategic trade controls by the World Customs Organisation (WCO).

 INTRODUCTION

The importance of strategic trade controls to Panama cannot be overstated.  It faces threats on a number of fronts, not just the movement of goods on ships using the Panama Canal[1] (such as in the 2013 case involving the North Korean ship, Chong Chon Gang)[2], but also –

  • through export, re-export and transhipment using its 14 private ports and 14 state-owned and operated ports, with 3 major container/ro-ro terminals on the Atlantic/Caribbean coast and 2 on the Pacific coast. Cargo can be off-loaded, reloaded, and transported on via the Canal or by road or rail across the isthmus[3]. This could also involve and affect the country’s substantial logistics and storage sector;
  • through use (or abuse) of vessels on its shipping register, the world’s largest, having over 8,000 vessels;
  • through the Colon Free Trade Zone (CFZ)[4] or “Zona libre”, the second largest freeport in the world;
  • from companies established in, or administered from, Panama and involved (deliberately or unsuspectingly) in the evasion of trade controls; and
  • from the involvement of its significant banking (including the International Financial District of Panama)[5] and insurance sectors.

The Canal itself, whilst an international thoroughfare for shipping handling more than 3% of the world’s trade, is not an international shipping lane, but rather a waterway within the national territory (and territorial waters) of the Republic of Panama[6].  Thus, any goods on vessels entering the Canal, even if not offloaded at any time in the country, could be said to be “in transit” through Panama.

While 10% of Panama’s GDP is said to be due to the Canal, around 65% is attributable to exports of goods and services.  In 2013, it was reported that Panama exported $17.5 billion worth of goods – equivalent to around 42% of GDP, with services comprising a further $9.8 billion, or 23% of GDP[7].  The majority of Panama’s exported services are related either directly or indirectly to the Panama Canal and the CFZ.

The World Customs Organisation (WCO) has said that customs authorities face two strategic threat scenarios: the possibility of the supply chain being used as a delivery system for a weapon of mass destruction (WMD) – the “bomb in a box” scenario – and the possibility of the supply chain being used to transport the materials, equipment, and components needed to produce a weapon[8].  Both of these scenarios represent a real threat to Panama and, additionally, any threat to the Canal (from the “bomb in a box”) would also represent a very serious threat to the world economic framework.

STRATEGIC TRADE CONTROLS

These are controls placed on the import, export, transfer etc of items that may that have legitimate civilian uses, but can also be used in the production or delivery of WMD or other conventional defence-related items (hence their being termed “dual-use items”).   Whilst export controls are a vital element, they are not the only one.  The controls also complement those on the supply and movement of military goods and technology, and the enforcement of trade sanctions, arms embargoes etc imposed by the UN, the EU or other international or regional bodies, or by individual countries.

The term WMD encompasses not only nuclear and radiological weapons, including radiological dispersal devices (the so-called “dirty bomb”), but also chemical and biological weapons.  The controls form an important part of international non-proliferation efforts, and involve not just physical controls on the items themselves, but also on related activities such as brokering and financing and on intangibles, such as technology transfer.

There are a number of relevant international treaties and agreements, and UN Security Council Resolution 1540 of 2004 (UN SCR 1540) is a crucial element, requiring states to take appropriate action to prevent the acquisition and use of WMD by non-state actors (see below for more detail on UN SCR 1540).

The proper enforcement of strategic trade controls not only has the obvious benefits for regional and international security, it also helps to protect the reputation and integrity of the country and its business community, and may have direct economic benefits by improving eligibility for access to, or involvement in, high-tech or sensitive technologies, projects and business ventures.

 THE NEW LAW OF MAY 2017

In May 2017, Panama enacted Executive Decree 81[9] (“the Decree”) for the control of trade and dual-use material for reasons of national and international security – in other words for the purposes of preventing proliferation of WMD and their delivery systems.  The Decree formed part of the Action Plan submitted to the UN by Panama in October 2017 outlining how it intended to implement UN SCR 1540, as amended[10].  As the Action Plan stated, UN SCR 1977 (2011) had invited member states to prepare on a voluntary basis a national implementation action plan for implementing UN SCR 1540 and to submit those plans to the UN’s 1540 Committee.

The aim of UN SCR 1540 is preventing chemical, biological, radioactive and nuclear (CBRN) weapons, as well as their means of delivery and related materials, from coming under the control of non-state actors[11], terrorist groups or organised crime and it urges member states to refrain from providing them with any form of support.  It also urges member states, in accordance with their national procedures, to adopt and enforce appropriate effective laws which prohibit any non-state actor to manufacture, acquire, possess, develop, transport, transfer or use chemical, biological, radioactive or nuclear weapons and their means of delivery, and related materials, for terrorist purposes or organised crime, as well as attempts to engage in any of the activities, participate in them as an accomplice, assist them or finance them.

Panama was already party to various relevant international treaties and agreements concerned with the control of CBRN weapons and materials – the Nuclear Non-Proliferation Treaty, the Biological and Toxic Weapons Convention, the Chemical Weapons Convention, and the Convention on the Physical Protection of Nuclear Materials.

Wisely, Panama chose to frame the new law so as to target both states and non-state actors.  It was required by the Decree to adopt a list of dual-use goods[12], and to make the transport, transfer, management, trade, import, export and re-export subject to control.  The Decree also called for the developing of a system to licence such goods, as well as outreach and educational efforts, and enforcement – all of which was to be outlined in an action plan required by the Decree.

IMPLEMENTING BODIES AND THEIR ROLES

Two bodies were created by the Decree –

  • National Council on Secure Trade (NCST) – comprised of representatives from several ministries[13]; its roles include approval of the strategic trade control regulations (this is its main role), revoke licences, and manage inclusion on the national register created under the Decree; and
  • Technical Committee on Secure Trade and Transport (TCSTT) – comprised of members from the same ministries as the NCST, plus a representative of the Panama Canal Authority (PCA)[14]; its roles are to provide technical and administrative support, chiefly by drafting and updating the strategic trade control regulations and the National Control List, and developing and maintaining the licensing process. The latter role includes making decisions on the granting of licences.

Also in existence and of relevance are the –

  • Container Technical Inspection Unit – which uses radiation portal monitors (RPM) at the main coastal ports. These devices are passive, non-intrusive devices used to screen objects and persons passing through them for nuclear and radiological materials[15];
  • Inter-Institutional Risk Analysis Office – for the analysis of information in cargo manifests to determine the risk profiles of cargo, vessels, and economic agents;
  • Joint Port Control Units (JCPU) – Panama is also a party to the Global Container Control Program[16], an initiative of the UN Office on Drugs and Crime and the WCO designed to improve container traffic security by providing training and promote co-operation among member nations. One of its elements is the creation of JCPU which specialise in the inter-agency profiling of port units at select container terminals in seaports or dry ports, and in Panama JPCU have been established at Balboa which covers the Port of Balboa; and in Colon which covers Port of Manzanillo, Colón Container Terminal and Port of Cristobal;
  • National Customs Authority – responsible for administering the policies, guidelines and provisions governing the customs system. It controls and supervises customs operations and the flow of goods entering, remaining in or exiting the country and those goods covered by permanent or temporary customs regimes, customs warehouses, free trade zones and duty-free stores.  It employs a “single window” system[17], the Sistema Integrado de Gestión Aduanera (SIGA) and, since 2017, the Panamanian Marine Authority and the Panama Canal Authority implemented Ventanilla Única Marítima de Panamá (VUMPA), an electronic system that requires ships to produce required documentation in advance of their arrival so that government agencies can conduct risk assessment and be ready for inspection by a single official.  A 2016 report found that SIGA could be adapted to be used to provide a strategic goods licensing system; and
  • Panama Canal Authority (PCA)[18] – which can deny a vessel transit of the Canal if the condition or character of the cargo “is such as to endanger Canal structures”, which must be taken to include potentially dangerous cargo, or “which might render the vessel liable to obstruct the waterway”, which again might include a dangerous cargo sinking or rendering the ship uncontrollable. The Regulation on Navigation in Panama Canal Waters requires a minimum of 96-hour notice of intent to transit with dangerous cargo (and similarly, cargo comprising hazardous waste is also required to be notified to the PCA.  It also requires all vessels transporting radioactive materials through the Canal to comply with applicable requirements[19], as published in the current edition of the IMDG Code[20] and there are specific requirements for certain types of radioactive cargo[21] with, for example, 30 days’ notice of fissile material carried as cargo – for other vessels intending to arrive at Panama Canal waters all cargo carried on board must be declared at least 96 hours prior to their arrival.

REGISTRATION OF BUSINESSES INVOLVED WITH DUAL-USE GOODS                                     

The Decree requires a National Registration, Tracking, and Inventory System for Economic Agents of Dual-Use Goods.  This will entail a national register, and any “economic agent” wishing to participate in “handling”[22] dual-use goods will have to be registered.  It will be an electronic platform, managed by TCCST.

TCCST will also develop risk profiles of applicants for inclusion on the register.

At the time the Decree came into force the evidence appeared to show that Panama did not have a significant number of companies that imported or exported dual-use items.  Nevertheless, outreach and training would be needed to ensure that both officials and business was aware of the new controls, the requirement for registration when appropriate, and, in particular, the application of the controls to intangible technologies.

Panama is receiving assistance from the US Government under the Export Border and Related Security (EXBS) programme[23], with a focus on legal, licensing, and enforcement training, along with providing information systems and equipment.  There is also training and assistance provided under the Global Container Control Program[24].

 ADOPTION OF THE EU LIST OF DUAL-USE ITEMS

Rather than compile its own list of items that should be subject to control, it was proposed that Panama should simply adopt the dual-use control list in use in the EU.  This had the advantages of complying with all the relevant international non-proliferation agreements, such as –

  • the Wassenaar Arrangement[25] on transfers of conventional arms and dual-use goods and The selection criteria for dual-use items under the Wassenaar Arrangement is that dual-use goods and technologies to be controlled are those which are major or key elements for the indigenous development, production, use or enhancement of military capabilities;
  • the Australia Group[26], the aim of which is the harmonisation of export controls, to ensure that exports do not contribute to the development of chemical or biological weapons;
  • the Nuclear Suppliers Group[27], a group of nuclear supplier countries that seeks to contribute to the non-proliferation of nuclear weapons through the implementation of two sets of Guidelines for nuclear exports and nuclear-related exports; and.
  • the Missile Technology Control Regime[28], a voluntary partnership of 35 countries to prevent the proliferation of missile and unmanned aerial vehicle (UAV or “drone”) technology capable of carrying above 500 kg payload for more than 300 km.

It is also regularly updated, and benefits from the input of all the Member States, several of which are themselves major producers of military and dual-use goods and technology.

Another useful factor is that the EU correlates the codes allocated to the dual-use items to their classification codes (“CN Codes” or commodity codes), 8-digit codes used to identify the items for customs purposes on declarations and other documentation[29].  These classification codes themselves correlate to the codes used worldwide under the Harmonised System (“HS Codes”)[30].

The 6-digit HS Code directly equates to the first 6 digits of the CN Code, allowing the items in question to be identified.  The first 2 digits identify the chapter the goods come under (e.g. Chapter 09 – Coffee, Tea, Maté and Spices).  The next 2 digits identify groupings within that chapter (e.g. 09.02 – Tea, whether or not flavoured).  The final 2 digits are even more specific (e.g. 09.02.10 – Green tea: not fermented).  Up to the 6-digit level, all countries classify products in the same way (a few exceptions exist where some countries apply old versions).

A decision was made in early 2018 for Panama to adopt the EU list.

Note that the EU uses the term “dual-use item” and not “dual-use goods”.  This emphasises that the controls and the control list deals with not just physical goods, but also software and technology – and therefore can cover intangible “exports” (such as the sending of designs or data) as well as the physical export of goods themselves.

Furthermore, since 2011 the EU Regulation prohibited exports of dual-use goods to destinations subject to an arms embargo imposed by the EU, OSCE[31] or UN.

The EU currently has in development a “recast” of the Regulation[32] which contains the dual-use list.  This recast, amongst other things, introduces a new “human security” dimension to export controls, to prevent the abuse of certain cyber-surveillance technologies by regimes with a questionable human-rights record, and use OECD-based “due diligence” guidelines to ensure that their goods cannot fall into the wrong hands.  The proposals also formally introduce standardised operational internal control programmes (ICP) as part of the assessment in the granting and control of export authorisations and licences[33] (such ICP were previously required by only some EU Member States).

It can be expected that the risk profiling and risk assessments undertaken by the Panamanian authorities would also take into account the existence and worth of such ICP.

The EU Regulation also includes a ‘catch-all clause’ for items which could be used in connection with a WMD programme but may not be included in the list of controlled items[34], and controls on brokering dual-use items and their transit through the EU[35].  It is unclear if either of these aspects are dealt with in the Panamanian law.

Under the EU Regulation, dual-use items are goods and technology which have both a legitimate civil use, but have also a use, or potential use, for military purposes, or for use in connection with weapons of mass destruction.  Goods affected include all those which can be used for non-explosive uses (as those with explosive uses would be caught by the general controls on military and paramilitary and related goods), and those relevant to the development, production or use of nuclear weapons and other weapons of mass destruction.

PANAMA NATIONAL RISK ASSESSMENT

In December 2016, the relevant authorities in Panama approved a National Risk Assessment on Money Laundering and the Financing of Terrorism (NRA), which was published in early 2017.  The NRA identified as the main criminal that to Panama as being transnational organised crime, using Panama for the transit or flow of several activities, such as drug trafficking, human trafficking, gunrunning, etc; and that the main domestic threats for money laundering are drug trafficking, corruption, financial crimes and copyright crimes such as trademark counterfeiting and smuggling.  The export, transit or transhipment of strategic goods was not highlighted as a significant threat.  However, it did note that the most vulnerable sectors for money laundering in Panama would be the sectors related to foreign trade, such as the free trade zones, especially the Colon Free Zone.  It said that there was no clear terrorism threat in Panama (at least to Panama itself, whereas an attack on the Canal could equally be a means of damaging the US, China or other major beneficiary from its services, or as merely a “spectacle” to gain publicity).  It was the financing of terrorism that was seen as a greater threat.

GAFILAT MUTUAL EVALUATION REVIEW

In January 2018, GAFILAT, the regional FATF-style body[36], published its Mutual Evaluation Report (MER) of the Republic of Panama[37] following an on-site visit made in 2017.

One of the key findings of the MER was that illicit funds derived from threats other than tax crimes, within or without the country, as identified by the NRA (i.e. drug, gun and human trafficking, smuggling, financial crimes, corruption, and the like) were not adequately faced due to the significant vulnerabilities disregarded by the 2017 National Strategy[38] in the main risk sectors (corporate services, free zones, real estate and financial sectors).

However, the MER, like the NRA and the National Strategy focussed primarily on money laundering/ financing of terrorism (AML/CFT) risks, with little or no mention of countering proliferation financing (CPF), and with no direct reference to non-proliferation activity involving strategic trade controls.  Even then, the MER criticised the NRA, saying that while there were mechanisms in place to prevent the use of the financial system for terrorist financing (TF) and to implement targeted financial sanctions related to TF and proliferation, the NRA had in fact evaluated mainly terrorism risk (which is viewed as being low, there being no domestic, homegrown terrorism threat) and not TF risk.  The MER did call on Panama to pay greater attention for proliferation financing risks – though it did award the country a “substantial” rating for effectiveness under the relevant Immediate Outcome (target) IO.11 and “largely compliant” for the relevant FATF Recommendations 5, 6, 7 and 8.

In the section of the MER on proliferation financing, the case study used is that of the North Korean ship, Chong Chon Gang referred to in the introduction to this paper (see below).

The MER did note that the Panamanian shipping registry had cancelled the registration of 88 vessels (and published the details) linked to North Korean people or companies – which perhaps indicated a degree of proactive action on the part of the authorities in the non-proliferation field.

mer 

UN SECURITY COUNCIL RESOLUTION 1540 (2004), AS AMENDED

UN SCR 1540 imposes binding obligations on all member states to adopt legislation to prevent the proliferation of nuclear, chemical and biological weapons, and their means of delivery, and establish appropriate domestic controls over related materials to prevent their illicit trafficking.  In particular, it –

  • aims to prevent chemical, biological, radioactive and nuclear (CBRN) weapons, as well as their means of delivery (such as missile systems) and related materials, from coming under the control of non-state actors, terrorist groups or organised crime;
  • urges member states to refrain from providing such non-state actors, terrorist groups or organised crime with any form of support;
  • urges member states, in accordance with their national procedures, to adopt and enforce appropriate effective laws which prohibit any non-state actor to manufacture, acquire, possess, develop, transport, transfer or use CBRN weapons and their means of delivery, and related materials, for terrorist purposes or organised crime, as well as attempts to engage in any of the foregoing activities, participate in them as an accomplice, assist them; and
  • urges member states, in accordance with their national procedures, to adopt and enforce appropriate effective laws which prohibit the financing of CBRN weapons, their means of delivery, and related materials,

and UN SCR 1977 (2011) invites member states to prepare (on a voluntary basis) national implementation action plans for implementing UN SCR 1540 and to submit those plans to the UN’s 1540 Committee[39] (which was established pursuant to UN SCR 1540).

The UN Office for Disarmament Affairs[40] provides support for activities of the 1540 Committee, which is tasked to report to the Security Council on the implementation of UN SCR 1540 and focusing on 3 key areas –

  • facilitation of national implementation activities including through regionally co-ordinated approaches;
  • co-operation between international, regional and sub-regional organisations; and
  • effective partnerships of key stakeholders including civil society, private sector and academia.

The 1540 Committee employs what it terms the “1540 Matrix”, which has fields representing the requirements of UN SCR 1540 alongside which are the measures that member states have taken in respect of these requirements.  A matrix for each member state has been prepared by the group of experts.  The information in the matrices originates primarily from national reports provided by the member states, complemented by official government information, including that made available to intergovernmental organisations.  The matrix thus provides a snapshot view of the implementation of UN SCR 1540 by that member state.  The latest for Panama available online was last updated in September 2013[41], so is somewhat out of date when one takes into account steps taken by the country – both for the purposes of its 2017 Action Plan for implementation of UN SCR 1540, as well as for the NRA and following the MER report – some of which are mentioned in this paper.

WCO STRATEGIC TRADE CONTROL ENFORCEMENT IMPLEMENTATION GUIDE

This guide[42] was produced to provide WCO member states with practical assistance related to enforcing strategic trade controls.  It was designed to act as a guide in the development and review of a country’s Strategic Trade Control Enforcement (STCE) processes and procedures and provide a framework for training along those lines.  It is divided into two principal sections –

  • for senior customs managers and policy officials: on the importance of strategic trade controls, the role of customs, and how to establish STCE procedures and processes and create conditions for their success; and
  • for operational customs officers: on techniques and outlining the major functions that comprise the overall strategic trade control process and several related activities.

Annex II to the Guide provides a concise background on WMD that largely determine what goods are considered strategic in the international context, and Annex III provides profiles of many strategic goods, organised so as to correlate to HS Codes to enable cross-referencing.  Helpfully, Annex VI provides a glossary of terms used.

THE 2017 ACTION PLAN FOR IMPLEMENTATION OF UN SCR 1540

This Action Plan was lodged with the Chair of the 1540 Committee at the UN in October 2017[43].  It set out 5 basic strategic goals –

  1. to enact laws to prevent and punish the manufacture, acquisition, possession, development, transport, transfer or use of nuclear, radioactive, chemical or biological weapons and their means of delivery, and related materials, particularly for terrorist purposes, as well as attempts to engage in such activities, participate in them as an accomplice, assist them or finance them;
  2. to ensure stricter enforcement of administrative rules to discourage, detect, prevent and punish the above, including through financing; – this included adoption of a suitable national list of dual-use goods (achieved through adoption of the EU list) and the means to oversee their transit and transfer through the country. It would also include a national register of end-users of those economic operators and facilities handling dual-use goods (achieved through the national register provisions);
  3. to empower interagency co-ordination mechanisms and fora to achieve effective compliance with UN SCR 1540, UN SCR 1718 and subsequent Security Council Resolutions, in partnership with the private and academic sectors – this included putting in place arrangements for co-operation and information-sharing among the authorities responsible for security at ports, airports and frontiers and in territorial waters, so as to provide timely assessment of risks related to import, export, re-export, transit and trans-shipment of the relevant goods (and any related financing activities);
  4. to strengthen the mechanisms for timely information-sharing and international co-operation; and
  5. to organise, through the 1540 Committee and other specialised bodies, technical assistance to strengthen national capacity to fulfil the commitments made under UN SCR 1540, legislative reforms and international co-operation.

MORE INFORMATION ON EXECUTIVE DECREE 81

For more information on Executive Decree 81 and its path to implementation, please see “Facilitating the Implementation of Strategic Trade Controls in the Republic of Panama” (Strategic Trade Review Journal, Spring/Summer 2018)[44].

Ray Todd

12th October 2018

————————————————————————————————————————————–

[1]  Which accounts for around 10% of the country’s GDP.

[2]  https://www.bbc.co.uk/news/world-asia-23324170

[3]  The Trans-American Highway also runs south as far as Panama. (where it stops, only to recommence its path from Colombia southwards).

[4]  https://www.colonfreetradezone.com/freezone-colon.html

[5]  More than 120 banks from various countries are said to comprise the International Financial District of Panama, and more than 20 participate in the financial activity of the CFZ from their offices and branches located within the Free Trade Zone commercial centre.

[6]  For which you pay a toll to use.

[7]  https://www.focus-economics.com/countries/panama

[8]  http://www.wcoomd.org/en/topics/enforcement-and-compliance/instruments-and-tools/~/media/7A05799E8D3A46C8B8355175EEBA4322.ashx

[9]  https://www.gacetaoficial.gob.pa/pdfTemp/28287_B/61296.pdf

[10]  http://www.un.org/en/sc/1540/documents/Panama_action_plan.pdf

[11]  An individual or organisation that has significant political or other influence but is not allied to any particular country or state.  In the context of UN SCR 1540 it is often used to mean terrorist and paramilitary organisations and their members, supporters and organisers.

[12]  Note that the EU Dual-use List adopted by Panama as its own uses the term “dual-use items”.

[13]  With the Ministry of Commerce and Industry being the lead ministry.

[14]  Autoridad del Canal de Panamá (or ACP) in Spanish: https://www.pancanal.com/eng/op/notices/2018/N01-2018.pdf

[15]  For some background on RPM, see this Stanford University article: http://large.stanford.edu/courses/2016/ph241/wolk1/

[16]  https://www.unodc.org/ropan/en/BorderControl/container-control/ccp.html

[17]  Such a system provides a single entry point (or “window”) – either physical or electronic – for the submission of all data and documents related to the declaration, clearance and release of goods, and managed by one agency, which then can inform any other agency required and apply or direct any necessary control action. See: http://tfig.unece.org/contents/single-window-for-trade.htm

[18]  https://www.pancanal.com/eng/index.html

[19]  As well as proof of financial responsibility and adequate provision for indemnity to third parties as a guarantee against any possible damage and/or loss.

[20]  The International Maritime Dangerous Goods Code of the International Maritime Organisation: see http://www.imdgsupport.com/free%20imdg%20code%20introduction%2037-14.pdf

[21]  See paragraph 16 of NOTICE TO SHIPPING No. N-1-2018: https://www.pancanal.com/eng/op/notices/2018/N01-2018.pdf

[22]  The Decree defines “handling” as meaning: “Any action that consolidates, deconsolidates, guards, preserves, packs, unpacks, repacks, handles, dispatches, transships, transits, transports, ensure, measure, certifies, operates, maritime, land or air terminals, remits by mail any of the goods, included in the National Control list of Dual-Use Goods.

[23]  Part of the US State Department’s Bureau of International Security and Non-proliferation (ISN), EXBS works with partner governments throughout the world seeking “to prevent the proliferation of weapons of mass destruction… by helping to build effective national strategic trade control systems in countries that possess, produce, or supply strategic items, as well as in countries through which these items are most likely to transit.” https://www.state.gov/t/isn/ecc/c27911.htm

[24]  https://www.unodc.org/ropan/en/BorderControl/container-control/ccp.html

[25]  https://www.wassenaar.org/

[26]  https://australiagroup.net/en/

[27]  http://www.nuclearsuppliersgroup.org/en/

[28]  http://mtcr.info/

[29]  http://trade.ec.europa.eu/doclib/html/155445.htm

[30]  https://unstats.un.org/unsd/tradekb/Knowledgebase/50018/Harmonized-Commodity-Description-and-Coding-Systems-HS

[31]  Organisation for Security and Co-operation in Europe: https://www.osce.org/

[32]  Council Regulation 428/2009/EC (as amended): http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1527179601283&uri=CELEX:02009R0428-20171216

[33]  For a handy summary of the ICP requirements, see https://www.steptoeinternationalcomplianceblog.com/2018/10/eu-promotes-export-controls-and-sanctions-compliance-programs/#page=1

[34]  An authorisation shall be required if, while not listed, the items in question are or may be intended, in their entirety or in part, for use” at any stage of development of chemical, biological, or nuclear weapons, or “are or may be intended, in their entirety or in part, for a military end-use, exported to countries subject to an arms embargo, or intended for use as a component of listed military items exported without authorisation; and it is the responsibility of the exporter to report to the authorities any awarenessthat the item he wants to export falls into these categories, even if non-listed.

[35]  Article 2(5) of the EU Regulation refers: “brokering services” means the negotiation or arrangement of transactions for the purchase, sale or supply of dual-use items from a third country to any other third country, or the selling or buying of dual-use items that are located in third countries for their transfer to another third country – but the sole provision of ancillary services is excluded from this definition; such ancillary services are transportation, financial services, insurance or re-insurance, or general advertising or promotion.

[36]  GAFILAT is what is termed a “FATF-Style Regional Body” or FSRB.  Modelled on the Financial Action Task Force (itself an organ of the Organisation for Economic Co-operation and Development or OECD) these are regional bodies are granted certain rights by FATF and serve as regional groupings for matters related to AML/CFT.  Their primary purpose is to promote a member jurisdiction’s implementation of comprehensive AML/CFT regimes, implement the FATF Recommendations and evaluate and report on member state’s compliance to those Recommendations.

[37]  http://www.fatf-gafi.org/media/fatf/documents/reports/mer-fsrb/MER-GAFILAT-Panama-Jan-2018.pdf

[38]  https://superbancos.gob.pa/en/prev-cont-il-op/national-strategy

[39]  http://www.un.org/en/sc/1540/

[40]  https://www.un.org/disarmament/wmd/sc1540/

[41]  http://www.un.org/en/sc/1540/documents/Panama%20revised%20matrix.pdf

[42]  http://www.wcoomd.org/en/topics/enforcement-and-compliance/instruments-and-tools/guidelines/wco-strategic-trade-control-enforcement-implementation-guide.aspx

[43]  http://www.un.org/en/sc/1540/documents/Panama_action_plan.pdf

[44]  https://strategictraderesearch.org/current-issue-summer-2018/

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KENYAN BANKS AND MILITARY IMPLICATED IN SOUTH SUDAN MONEY LAUNDERING

On 12th October, VoA published a video report saying that a new documentary has implicated Kenyan banks in money laundering for corrupt South Sudanese leaders.  There have also been calls to deport former South Sudan army chief Paul Malong Awan, who is subject to a UN travel ban and asset freeze, said to be living in Nairobi.

https://www.voanews.com/a/kenyan-banks-military-implicated-in-s-sudan-money-laundering-/4611293.html

https://annafrica.net/2018/10/12/kenyan-protest-demands-action-over-south-sudans-civil-war/

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 12

12th October 2018

US RELAXES RESTRICTIONS ON CANADIAN CANNABIS WORKERS

On 11th October, Yahoo News reported that US Customs and Border Protection says Canadian citizens working in the cannabis industry should be able to enter the US for reasons unrelated to the marijuana industry.  This followed a previous vague statement that left the industry and investors facing uncertainty about travel of any kind to the US.

https://ca.news.yahoo.com/canadian-pot-industry-workers-able-171100650.html

US COAST GUARD IS CATCHING MORE DRUG-RUNNING SUBS, BUT MOST ‘VERY STEALTHY’ NARCO SUBS ARE PROBABLY GOING UNDETECTED

Business Insider on 11th October reported that Colombia’s navy had captured 14 “narco subs” on the country’s Pacific coast — compared to 4 it captured all last year and another sign of drug traffickers’ ingenuity.  The US Coast Guard reported in September 2017 that it had seen a resurgence of low-profile vessels, the most common kind of “narco sub,” capturing 7 of them since June 2017.  It explains that low-profile vessels were the earliest kind of narco sub, a category that includes self-propelled semi-submersibles, which use ballast to run below the surface, and that the vessels appeared in the 1990s.  It is said that criminal groups in Colombia continue to churn out homemade narco subs — 100 a year, according to one report.

https://www.businessinsider.com/coast-guard-capturing-more-drug-smuggling-narco-subs-2018-10

SPAIN DISMANTLES NETWORK SMUGGLING WEAPONS TO MOROCCO IN SPEEDBOATS

Morocco World News on 11th October reported that Spanish authorities stopped the boats carrying black market arms worth, 10 minutes after their departure from Cadiz.

https://www.moroccoworldnews.com/2018/10/255115/spain-smuggling-weapons-speedboats/

ALBANIA FAILS TO MAKE SIGNIFICANT PROGRESS IN MONEY LAUNDERING

The Tirana Times on 11th October reported that Albania only slightly improved its ranking at the 2018 Basel AML index, an annual ranking assessing the risk of money laundering and terrorist financing around the world, as it continued remaining a medium risk country, lagging behind 2 regional competitors; and was the 55th country most at risk of money laundering out of 129 countries worldwide.  An earlier 2018 report by the US Department of State said Albania remains at significant risk for money laundering due to rampant corruption and weak legal and government institutions.

http://www.tiranatimes.com/?p=138798

CYPRUS AMONG TOP 10 COUNTRIES SHOWING DECLINE IN FIGHTING MONEY LAUNDERING

The Financial Mirror on 11th October reported that Cyprus is among the top 10 decliners globally in combating money laundering and terrorism financing risks, according to the Basel AML Index.  Cyprus’ risk-rating score worsened by 0.75 points to 5.01 compared to 2017 putting it 80 among 129 countries –Tajikistan (8.3) was the worst in first place.  However, Finland, Iceland, Denmark and Slovenia, along with Cyprus – with the 7th highest increase – recorded a significantly higher risk rating in 2018.

http://www.financialmirror.com/news-details.php?nid=35967

MALTA PUBLISHES FAQ ABOUT THE VIRTUAL FINANCIAL ASSETS FRAMEWORK

Ganado Advocates reported that the Malta FSA has published a set of FAQ in relation to the Virtual Financial Assets framework. It provides key information on the framework itself, classification of DLT assets, VFA agents, Initial Virtual Financial Asset Offerings, VFA service providers, AML/CFT requirements and transitory provisions.

http://www.ganadoadvocates.com/resources/news/mfsa-publishes-faq-document-about-the-virtual-financial-assets-framework/

The FAQ are available at –

http://www.ganadoadvocates.com/wp-content/uploads/2018/10/MFSA-VFARFAQs-10.10.18.pdf

PANAMA PAPERS REVEAL OFFSHORE PAYMENTS BY MADAGASCAR’S SEAFOOD KING

ICIJ on 11th October reported that offshore entities played a key role in a network of companies owned by a rich and powerful shrimp merchant in the African island nation of Madagascar, as it showed how Aziz Ismail moved millions of dollars among offshore companies.  A French citizen born in Madagascar, he entered Madagascar’s shrimp industry in 1973.  His company, Unima, is now managed by his son Amyne Ismail and has subsidiaries around the world.  The company is the largest player in Madagascar’s $75 million shrimp industry, which has been criticised for damaging the environment.  In Madagascar, it is reported that 75% of the population survive on less than $1.90 a day.  The article shows links to his BVI company, Ergia Ltd and Unima Europe, a Monaco company.  An expert at Stockholm University is quoted as describing the arrangements as “aggressive tax planning scheme”, and saying that “it means loss of revenues for the country where the actual economic activities are taking place”.

https://www.icij.org/investigations/panama-papers/panama-papers-reveal-offshore-payments-by-madagascars-seafood-king/

NEW PARALLEL IMPORTATION DEFENCE TO TRADE MARK INFRINGEMENT IN AUSTRALIA

On 11th October, Clayton Utz in Australia reported that recent amendments to the Trade Marks Act 1995 have likely expanded the parallel importation defence to the benefit of importers of parallel products into Australia.  In the article, the firm discusses the relevant changes and how these may impact on parallel importers and owners of registered trademarks in Australia.

https://www.claytonutz.com/knowledge/2018/october/shades-of-grey-new-parallel-importation-defence-to-trade-mark-infringement-in-australia

INTERNATIONAL ACTION AGAINST LARGE-SCALE VAT FRAUD INVOLVING MOTOR VEHICLES

A news release from Eurojust on 11th October reported that during a joint action day in 7 EU Member States, an international organised crime group was tackled, involved in large-scale VAT fraud with a damage of more than €20 million, related to sales of second-hand vehicles.  The criminals bought used vehicles in Germany and then pretended to sell them to various companies in different EU Member States without paying VAT.  At the request of the German authorities, the action and led to the arrest of the main suspects.  The operations involved more than 100 house searches, particularly in Romania and Hungary, numerous hearings of witnesses and suspects and the recognition of freezing orders up to €18 million.

http://www.eurojust.europa.eu/press/PressReleases/Pages/2018/2018-10-11.aspx

CZECH GOVERNMENT FAILING TO COLLECT ONLINE GAMBLING FINES

Calvin Ayre on 11th October reported that the Czech Republic is pushing back against local media claims of the government’s inability to punish online gambling operators that serve local punters without a local licence.  Local media is said to have reported that of 24 fines totalling $20.4 million since the launch of the regulated market only $10,750 has been collected.  The article says the paltry sum collected is due to the lack of any real tools to compel companies with no physical presence in the country to cough up.

https://calvinayre.com/2018/10/11/business/czech-problems-collecting-online-gambling-fines/

US CUSTOMS HOPES TO EVALUATE BLOCKCHAIN PILOT BY DECEMBER

Customs Today on 11th October reported that US Customs and Border Protection (CBP) representatives said the agency has concluded its latest round of testing blockchain technology for supply chain management.

http://www.customstoday.com.pk/us-customs-agency-hopes-to-evaluate-blockchain-pilot-by-december/

UK: FAILURE TO DISCLOSE VITAL EVIDENCE IN CRIMINAL CASES GROWING, SAYS WATCHDOG

The Guardian on 11th October reported that failure to disclose vital evidence is the biggest single cause of miscarriages of justice and the problem is getting worse, the outgoing chairman of the Criminal Cases Review Commission (CCRC) has said.  He also highlighted a shortage of adequately trained investigators, resulting in criminals escaping justice, “trials collapsing at the courtroom door” and “convictions which prove unsafe” and are avoidable.

https://www.theguardian.com/law/2018/oct/11/failure-disclose-evidence-miscarriage-justice-warning-criminal-cases-review-commission

LAW SOCIETY PLEDGES ACTION OVER SOLICITORS’ USE OF NON-DISCLOSURE AGREEMENTS

Legal Futures on 12th October reported that the Law Society has told MPs that it is to take action over the inappropriate use of non-disclosure agreements by solicitors.  This will involve guidance for both solicitors and their clients.  The Bar Standards Board will also be issuing guidance later this month.

https://www.legalfutures.co.uk/latest-news/law-society-pledges-action-over-solicitors-use-of-ndas

ISIS’S NEW PLANS TO GET RICH AND WREAK HAVOC

A commentary piece on the website of RAND Corporation on 10th October says that while IS has lost nearly 98% of the territory it once controlled, the group is ripe for a comeback in Sunni-majority areas of Iraq and Syria, and is developing new streams of revenue.  During the apogee of its territorial control in 2015, the Islamic State accrued nearly $6 billion, making it by far the wealthiest terrorist group in history.  Islamic State primarily generated its wealth from 3 main sources: oil and gas, taxation and extortion, and the 2014 looting of Mosul.  It says that its surviving leadership may have smuggled as much as $400 million out of Iraq and Syria, and will seek to launder this money through front companies in the region, especially in Turkey, with some cash converted to gold and stockpiled for sale in the future.  Reference is made to a diversified funding portfolio, and that it has developed a knack for raising money through a range of new criminal activities, including but not limited to extortion, kidnapping for ransom, robbery and theft, drug smuggling, and trafficking in antiquities.

https://www.rand.org/blog/2018/10/isiss-new-plans-to-get-rich-and-wreak-havoc.html

SOLICITOR “IGNORED MONEY LAUNDERING DUTIES”

Legal Futures on 12th October reported that Amit Kumar Manibhai Patel, who recklessly exposed his firm to the risk of money laundering has been fined £12,500 by the Solicitors Disciplinary Tribunal (SDT).

https://www.legalfutures.co.uk/latest-news/solicitor-ignored-money-laundering-duties

OIL’S $133 BILLION BLACK MARKET

On 11th October, Oil price.com carried an article about the 9th October report from Yale University in the US – see https://wordpress.com/post/raytodd.blog/4916 saying that a flourishing black market is no surprise, with about $133 billion worth of fuels stolen or adulterated every year.  These practices fund dangerous non-state actors such as the Islamic State, Mexican drug cartels, Italian Mafia, Eastern European criminal groups, Libyan militias, Nigerian rebels and more – and are a major global security concern.  The top 5 countries accused of oil trafficking – Nigeria, Mexico, Iraq, Russia, and Indonesia.

https://oilprice.com/Energy/Energy-General/Oils-133-Billion-Black-Market.html

MEASURES TO PREVENT CHINA’S ILLEGAL DIVERSION OF US CIVIL NUCLEAR TECHNOLOGY FOR MILITARY OR OTHER UNAUTHORISED PURPOSES

On 11th October, the US Department of Energy reported measures which it says are the result of a US government policy review prompted by concerns about China’s efforts to obtain nuclear material, equipment, and advanced technology from US companies. It says that there will be a presumption of denial for new license applications or extensions to existing authorisations related to the China General Nuclear Power Group, which is currently under indictment for conspiring to steal US nuclear technology.  The controls include those on the export of source codes (including for computer programs, systems, or components), and certain engineering and manufacturing techniques.

https://www.energy.gov/articles/doe-announces-measures-prevent-china-s-illegal-diversion-us-civil-nuclear-technology

The new licensing policy is spelled out in –

https://www.energy.gov/sites/prod/files/2018/10/f56/US_Policy_Framework_on_Civil_Nuclear_Cooperation_with_China.pdf

UK: EX-TAXMAN USED OFFSHORE FIRMS, ACCOUNTS FOR £6.9 MILLION FRAUD SCAM

KYC 360 on 12th October reported that David Michael Hughes, aka Mike Hughes, 52, worked for the Inland Revenue in the 1980s before setting up as a tax consultant in Kent.  He led a conspiracy which used a string of UK and offshore companies and bank accounts to steal £6.9 million in taxes paid by clients and deducted from workers’ wages, through fraudulent payroll schemes.  Hughes left the UK in September 2011, eventually setting up home in Northern Cyprus, which does not have an extradition treaty with the UK.  He was arrested by HMRC investigators at Heathrow Airport in January 2018 when he arrived on a flight from Istanbul.

https://kyc360.com/news/uk-ex-tax-man-used-offshore-firms-accounts-for-6-9m-fraud-scam/

MORE THAN 5 TONNES OF CANNABIS RESIN RECOVERED IN STRAIT OF GIBRALTAR

The Gibraltar Chronicle on 12th October reported that more than 5 tonnes of cannabis resin was recovered in the Strait of Gibraltar by Spanish authorities in 2 seizures, and 5 individuals were arrested on suspicion of drug trafficking as they made their way towards Algeciras on a RHIB.

http://chronicle.gi/2018/10/five-tonnes-of-cannabis-resin-recovered-from-the-strait/

SERBIA ENDS VISA-FREE TRAVEL FOR IRANIANS

Rferl on 12th October reported that Serbia has scrapped visa-free entry for Iranians little more than year after it was introduced out of concern that some Iranians were using the system as an avenue to permanently relocate to Europe.

https://www.rferl.org/a/serbia-abolishes-visa-free-travel-iranians-citing-abuses-by-some-migrants-to-eu-/29539329.html

TOP CORRUPTION INVESTIGATOR SHOT DEAD IN MOSCOW REGION

Rferl on 11th October reported that Colonel Yevgenia Shishkina, a top Russian investigator involved in serious economic crimes and corruption cases, has been shot dead in the Moscow region.  Shishkina had received threats and that her car was burned in an arson attack several months ago.

https://www.rferl.org/a/top-corruption-investigator-shot-dead-in-moscow-region/29537748.html

EUROPE RAISES RED FLAGS OVER CHINA’S CYBER ESPIONAGE

Politico on 9th October published an updated article saying that a PwC study urges the EU to strike a deal with China to limit cyber espionage, which it says is rampant, and that the EU is gearing up to confront China on alarming levels of cyber espionage on European industry.  The European Commission’s department for industry is said to be drafting a document that would sum up Europe’s worries on the issue and could still come up with new measures to defend European trade secrets.  The article says that the report details “public and private sector concerns about the increasing risks associated with cyber-theft of trade secrets in Europe”.  In the manufacturing sector, the report said, industrial espionage and cybertheft of trade secrets constitute up to 94% of all cyberattacks. The summary cites estimates that cyber espionage is costing Europe up to €60 billion in economic growth — a figure that would rise as European companies digitize their services.

https://www.politico.eu/article/europe-raises-red-flags-on-chinas-cyber-espionage/

10 CLAUSES UK GOVERNMENT MUST CHANGE IN COUNTER-TERRORISM AND BORDER SECURITY BILL

On 12th October, the House of Commons Library reported that the Joint Committee on Human Rights is proposing significant amendments to the Counter Terrorism and Border Security Bill.  The amendments will be considered and debated in the House of Lords as the Bill continues to progress through parliament in coming weeks.  The Committee asks the government to justify the extensive powers being proposed in the Bill, and raises concerns that the Bill is legislating close to the line – or indeed crosses the line – in breaching human rights.  It recommends that certain clauses and schedules be removed, clarified or narrowed in order to remedy these defects, and proposes a total of 27 amendments for Parliament to consider – including that the new stop and search powers at ports and borders should be amended so that they are always necessary and proportionate, and that a pre-approved vetted panel of lawyers could be made available to detainees as an alternative to limited access to legal advice proposed.

https://www.parliament.uk/business/committees/committees-a-z/joint-select/human-rights-committee/news-parliament-2017/counter-terrorism-border-security-sl-report-published-17-19/

US THREAT OVER LOW-COST POSTAL DELIVERIES FROM CHINA

Loadstar on 12th October reported that the Trump Administration is unhappy with the Universal Postal Union (UPU) and has threatened “repercussions” if the international mail body does not address below-cost delivery rates for e-commerce sent from China.  The system of postal fees for international mail deliveries gives an unfair advantage to Chinese online merchants.  Under the current framework of what are termed “terminal dues”, China Post pays its counterparts in North America and the EU for the delivery of mail that result in much lower mailing costs for Chinese online merchants, as China.  Imports can also benefit from duty-/tax-free delivery in the recipient country if below certain de minimis levels.

https://theloadstar.co.uk/us-threatens-act-chinas-online-cost-advantage-postal-fees/

PATISSERIE VALERIE CFO ARRESTED

On 12th October, Accountancy Daily reported that the cake and café chain Patisserie Holdings has announced that its finance director, Chris Marsh, who is currently suspended from his role, has been arrested by police and released on bail.  This follows the announcement of the shock discovery of ‘significant, potentially fraudulent, accounting irregularities’ and a demand from HMRC for £1.4 million together with a winding-up order.

https://www.accountancydaily.co/patisserie-valerie-cfo-arrested-0

THE MILLIONAIRES HOARDING UK FISHING RIGHTS

Unearthed on 10th October reported the results of a 5-month investigation that revealed that more than a quarter of the UK fishing quota is in the hands of a tiny group of the country’s wealthiest families, with just 5 families on the Sunday Times Rich List hold or control 29% of the UK’s fishing quota, and more than two-thirds of the UK’s fishing quota is controlled by just 25 businesses – and more than half of those are linked to one of the biggest criminal overfishing scams ever to reach the British courts (the Scottish “black fish” case, described as an “episode of shame” by the judge ). Meanwhile, in England nearly 80% of fishing quota is held by foreign owners or domestic Rich List families, and more than half of Northern Ireland’s quota is hoarded onto a single trawler.

https://unearthed.greenpeace.org/2018/10/11/fishing-quota-uk-defra-michael-gove/

For some detail on the “black fish” case see –

https://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-17153085

EXPORT ROUGH DIAMONDS: SPECIAL RULES

On 12th October, the FCO reissued a guide reminding one that you need a certificate to export rough diamonds.  You can export jewels, gold and precious metals without a licence or certificate, except for uncut (rough) diamonds.  There is also a ban on exporting precious and semi-precious stones, gold and silver items and other luxury goods to Syria and North Korea.

https://www.gov.uk/guidance/export-diamonds-special-rules

HONG KONG CONCLUDES CONSULTATION ON REVISED AML/CFT GUIDELINES

A release on Mondo Visione on 12th October reported that the Hong Kong Securities and Futures Commission (SFC) had released its conclusions on the consultation held over proposals to amend its Guideline on Anti-Money Laundering and Counter-Terrorist Financing.  The categories of politically exposed persons (PEP) will be expanded to include international organisation PEP who are persons entrusted with a prominent function by an international organisation.  The enhanced scrutiny for foreign PEP will be extended to domestic PEP and international organisation PEP where their business relationships with a firm are assessed to be of high risk.  Changes will also allow firms the flexibility to adopt reasonable risk-based measures to verify customer identification information. To facilitate non-face-to-face customer onboarding, firms are allowed to take a mix of supplementary measures to guard against impersonation risk.

http://www.mondovisione.com/media-and-resources/news/hong-kongs-securities-and-futures-commission-concludes-consultation-on-amendmen/

MONEYVAL UNDERTAKES ON-SITE EVALUATION OF MOLDOVA

The Council of Europe reported on 12th October that a team to evaluate Moldova’s AML/CFT systems made an on=site visit from 1st to 12th October.

https://www.coe.int/en/web/moneyval/home/newsroom/-/asset_publisher/zTE3FjHi4YJ7/content/council-of-europe-anti-money-laundering-and-counter-terrorist-financing-committee-visits-moldova?inheritRedirect=false&redirect=https%3A%2F%2Fwww.coe.int%2Fen%2Fweb%2Fmoneyval%2Fhome%2Fnewsroom%3Fp_p_id%3D101_INSTANCE_zTE3FjHi4YJ7%26p_p_lifecycle%3D0%26p_p_state%3Dnormal%26p_p_mode%3Dview%26p_p_col_id%3Dcolumn-4%26p_p_col_count%3D1

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TURKISH COURT RULES TO RELEASE US PASTOR AND LIFT TRAVEL BAN

Rferl on 12th October reported that Turkey was to release American evangelical pastor Andrew Brunson from house arrest despite sentencing him to 3 years in prison on terrorism-related charges.  He detention had led to retaliatory sanctions being imposed by the US.

https://www.rferl.org/a/turkish-court-rules-to-release-u-s-pastor-lift-travel-ban/29540590.html

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US THREAT OVER LOW-COST POSTAL DELIVERIES FROM CHINA

Loadstar on 12th October reported that the Trump Administration is unhappy with the Universal Postal Union (UPU) and has threatened “repercussions” if the international mail body does not address below-cost delivery rates for e-commerce sent from China.  The system of postal fees for international mail deliveries gives an unfair advantage to Chinese online merchants.  Under the current framework of what are termed “terminal dues”, China Post pays its counterparts in North America and the EU for the delivery of mail that result in much lower mailing costs for Chinese online merchants, as China.  Imports can also benefit from duty-/tax-free delivery in the recipient country if below certain de minimis levels.

https://theloadstar.co.uk/us-threatens-act-chinas-online-cost-advantage-postal-fees/

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US TREASURY: TEMPORARY EXTENSION OF UKRAINE-RELATED SANCTIONS LICENCES

On 12th October, OFAC again OFAC extended the expiration date of certain general licences related to EN+ Group plc and United Company RUSAL PLC, and issued 3 general licences for divesting or transfer of debt etc, and maintenance or winding down operations.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20181012.aspx

https://home.treasury.gov/news/press-releases/sm509

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“UAE VIOLATING SOMALIA ARMS EMBARGO”

Al Jazeera on 11th October reported that Abu Dhabi also accused of building an army base in Somaliland, according to an unpublished UN report, and that this involves the transfer of military equipment despite international resolutions against these arms shipments.  Somaliland is a northern region of Somalia that self-declared independence from the latter in 1991 following a civil war.  In September 2017, maritime police in the Somali state of Puntland intercepted a ship heading from Yemen to Somalia and seized weapons found on board, some of which are said to have been Serbian ones supplied to the UAE in 2016.  The UN Security Council imposed an arms embargo on Somalia in 1992.

https://www.aljazeera.com/news/2018/10/uae-violating-somalia-arms-embargo-report-181010121417061.html

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CZECH GOVERNMENT FAILING TO COLLECT ONLINE GAMBLING FINES

Calvin Ayre on 11th October reported that the Czech Republic is pushing back against local media claims of the government’s inability to punish online gambling operators that serve local punters without a local licence.  Local media is said to have reported that of 24 fines totalling $20.4 million since the launch of the regulated market only $10,750 has been collected.  The article says the paltry sum collected is due to the lack of any real tools to compel companies with no physical presence in the country to cough up.

https://calvinayre.com/2018/10/11/business/czech-problems-collecting-online-gambling-fines/

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GDPR MOST FREQUENTLY ASKED QUESTIONS: IS A LAW FIRM REQUIRED TO COMPLY WITH AN ERASURE REQUEST FROM A FORMER CLIENT?

Bryan Cave Leighton Paisner on 10th October published an article seeking to answer this question.  Not always, it answers.  It says that a company – including a law firm – is not always required to comply with a right to be forgotten request.  Specifically, it says, a law firm may continue to keep personal data that it maintains about a client unless one of 6 situations apply.

https://www.bryancave.com/en/thought-leadership/gdpr-s-most-frequently-asked-questions-is-a-law-firm-required-to-1.html

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 11

11th October 2018

OVERCOMING NEW RESTRICTIONS ON INVESTING IN US TECHNOLOGIES

On 9th October, Orrick published an article on the role of the Export Control Reform Act and the Foreign Investment Risk Review Modernization Act (FIRRMA) to screen investment projects contemplated by foreign investors and examining the national security implications of foreign investments, and its leading concern is transfer of technology important to the security of the US to a foreign entity in an acquisition or investment transaction.  It says that the good news is that FIRRMA introduces a special beneficial treatment (without being subject to CFIUS’ review) for investments through investment funds which satisfy certain criteria set forth by FIRRMA, and briefly outlines these criteria.

https://www.jdsupra.com/legalnews/overcoming-new-restrictions-on-87760/

PERU’S OPPOSITION LEADER FUJIMORI ARRESTED IN MONEY LAUNDERING PROBE

Xinhua and others on 11th October reported that Keiko Fujimori, head of Peru’s opposition Popular Force party and daughter of ex-president Alberto Fujimori, had been arrested on charges of money laundering and accepting illegal campaign financing received for the 2011 presidential campaign.

http://www.xinhuanet.com/english/2018-10/11/c_137524972.htm

ACTIVISTS ‘SHOCKED’ AFTER HONG KONG POLICE CHIEFS BLOCK ALERT TO BANKS ON HUMAN TRAFFICKING-LINKED TRANSACTIONS

The South China Morning Post on 11th October reported that Hong Kong’s determination to tackle money laundering linked to human trafficking has been called into question after it emerged that police chiefs blocked an alert – prepared by a specialist law enforcement unit – warning banks in the city to be aware of the problem.  The alert – titled “Combating Human Trafficking in Hong Kong and the Asia-Pacific Region” – was prepared by the recently formed Fraud and Money Laundering Intelligence Taskforce (FMLIT), a police-led joint effort involving the Monetary Authority and major banks and financial institutions.

https://www.scmp.com/news/hong-kong/law-and-crime/article/2167899/activists-shocked-after-hong-kong-police-chiefs-block

BRAZIL PROBES MONEY LAUNDERING AFTER SEIZING DIAMOND-STUDDED WATCHES

Business Insider on 10th October reported that federal police in Brazil are investigating possible money laundering in a case related to the airport seizure of wristwatches valued at some $15 million from the vice-president of Equatorial Guinea in September, and had carried out 7 search warrants in 2 states.  They seized $1.4 million and 20 diamond-studded watches valued at $15 million belonging to Teodoro Nguema Obiang at an airport in September.  Last October, millions of euros of assets belonging to Teodorin were ordered seized by a French court that found him guilty in absentia of using money plundered from his country to buy property and luxury cars.

http://uk.businessinsider.com/r-brazil-probes-money-laundering-after-seizing-diamond-studded-watches-2018-10

OCCUPIED CRIMEA: EUROPE’S GREY ZONE – THE SITUATION IN CRIMEA SINCE ITS ANNEXATION BY RUSSIA

On 10th October, the European Policy Centre published a briefing that provides a comprehensive account of the situation in Crimea since its annexation by Russia in March 2014, and explains the economic depression in both Crimea and Ukraine, as a result of Moscow expanding its control of the Sea of Azov and its blockade against the Ukrainian ports of Mariupol and Berdyansk.  It also describes the severe degradation of the human rights situation, and details of the rapid militarisation of Crimea by the Russian army.  It says that, in the face of EU and US sanctions, Russia is playing for time, in the expectation that EU unity will eventually collapse, and that the return of Crimea to Ukraine seems impossible for the foreseeable future.

http://www.epc.eu/pub_details.php?cat_id=3&pub_id=8765

PROTESTS AGAINST NEW TAX ON MONEY TRANSFERS IN ZIMBABWE BANNED

Defence Web on 10th October reported that Zimbabwe police will stop planned protests by the labour movement against a new tax on money transfers because of a standing order outlawing public gathering in the capital following a cholera outbreak.  The labour body called for the strike against the new tax as well as a central bank decision to order banks to open accounts for clients who earn foreign currency and separate their money from dollars in the local banking system, known as “Zollars”. Businesses and ordinary people objected to the 2% tax, arguing it eats into earnings while funding profligate spending by government.

http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=53376:protests-against-new-tax-in-zimbabwe-banned&catid=3:Civil%20Security&Itemid=113

GENOA RECONSTRUCTION AT RISK OF MAFIA INFILTRATION: ITALY’S ANTI-CORRUPTION CHIEF

Focus information agency on 11th October reported that the head of Italy’s Anti-Corruption Commission (ANAC) warned of the potential for the mafia to infiltrate the reconstruction of Genoa’s Morandi bridge.  n particular, the ANAC chief expressed consternation at the fact that the text of the decree exempts the commissioner from having to follow Italy’s Anti-Mafia Code, highlighting that this presents a “concrete risk” that the mafia could extend its tentacles into the reconstruction efforts.

http://www.focus-fen.net/news/2018/10/11/434939/the-local-genoa-reconstruction-at-risk-of-mafia-infiltration-italys-anti-corruption-chief.html

NIGERIA: EXECUTIVE ORDER 8 ON OFFSHORE MONEY LAUNDERING

This Day Live on 11th October reported that the Nigerian president had signed this Order under which Nigerian taxpayers who hold offshore assets and incomes are expected to, within a period of 12 months, voluntarily declare those assets and pay required taxes from such assets.  If they then pay a one-time levy of 35% on the total offshore assets or pay all outstanding taxes, penalties and interest after forensic audit of their offshore assets and income shall obtain immunity from prosecution.

https://www.thisdaylive.com/index.php/2018/10/11/buhari-signs-executive-order-8-on-offshore-money-laundering

THAILAND: MAN JAILED OVER FAKE BOMB DETECTOR FRAUD
The Bangkok Post on 11th October reported on a 9-year jail term to an executive of a distributor of AVIA Satcom Co in a third fraud case involving bogus GT200 bomb detectors.  It was the third fraud case involving AVIA Satcom Co which supplied the devices to several state agencies. According to the Department of Special Investigation (DSI), 16 cases have so far come to light.  The National Science and Technology Development Agency conducted tests and found they did not contain any electronic components.

https://www.bangkokpost.com/news/general/1555810

REFORMING ADMINISTRATION OF THE UK HORSERACE BETTING LEVY

On 10th October, the Department for Digital, Culture, Media and Sport published a news release detailing the proposal to reduce administrative inconveniences and financial costs on those affected by the Levy.  The draft Order will transfer responsibility for Levy assessment, collection and enforcement to the Gambling Commission, and pass responsibility for application of Levy funds to a body to be designated by the Secretary of State from April 2019. The reforms will result in the closure of the Horserace Betting Levy Board.  The draft Order was laid before Parliament on 9th October.  The Board was established in 1961 and is required to assess and collect a statutory levy from the gross profits of bets taken on British horseracing.  People forget that the levy was introduced to offset the decline in race day revenue for the racing industry following the legalisation of bookmakers’ off-course operations, which had meant that people wishing to place a bet on a horse race no longer needed to attend the racecourse.  The 10% levy now also extends to offshore online bookmakers – which significantly boosted the Board’s income.

https://www.gov.uk/government/consultations/consultation-on-the-use-of-a-legislative-reform-order-to-reform-the-administration-of-the-horserace-betting-levy

COMPANIES IN FINANCIAL DIFFICULTIES – DUTIES AND LIABILITIES OF DIRECTORS UNDER IRISH LAW

On 10th October, Matheson published a guide that summarises the principal duties and potential liabilities of directors under Irish law where a company is in financial difficulty.  The duties and potential liabilities summarised in the document will normally arise when a company is in financial difficulty or is insolvent based on a cash flow test or a balance sheet test.

https://www.matheson.com/images/uploads/documents/Companies_in_Financial_Difficulties_-_Duties_and_Liabilities_of_Directors_under_Irish_Law.pdf

PRINCIPAL DUTIES OF DIRECTORS UNDER IRISH LAW

On the same date the law firm also published this other guide.

https://www.matheson.com/images/uploads/documents/Principal_Duties_of_Directors_under_Irish_Law.pdf

SWISS TOP COURT REJECTS BID TO EXTEND BANKING SECRECY

Reuters on 10th October reported that Switzerland’s highest court has ruled that prosecutors cannot extend Swiss banking secrecy rules to all corners of the globe to pursue whistleblowers and other leakers at foreign subsidiaries.  It rejected an appeal by Zurich prosecutors in a 14-year legal battle involving former private banker Rudolf Elmer, who had been acquitted of breaking secrecy laws.

https://www.reuters.com/article/us-swiss-banking-secrecy/swiss-top-court-knocks-down-bid-to-extend-banking-secrecy-idUSKCN1MK0TK

RESTRICTION ON THE USE OF FOREIGN CURRENCY IN TURKISH CONTRACTS – EXEMPTIONS ANNOUNCED

On 10th October, CMS Law provided an update on the September law that restricted the use of foreign currency denominated or indexed payments for certain types of contracts among Turkish residents.  Now exemptions have come into effect upon their publication in the Official Gazette on 6th October.  The restriction only applies to contracts among Turkish residents – meaning either corporate entities established in or individuals resident in Turkey.  Contracts involving a foreign party are exempt from the restriction, subject to certain conditions.  The article summarises the exemptions available.

http://www.cms-lawnow.com/ealerts/2018/10/restriction-on-the-use-of-foreign-currency-in-turkish-contracts-exemptions-announced

MONEY LAUNDERING TACTICS ADAPTING TO BOOM IN COLOMBIA COCAINE PRODUCTION

Insight Crime on 10th October published an article detailing how criminal groups are having to diversify the ways in which they launder their money, reflecting the fragmented state of the country’s criminal world and the boom in cocaine production.  They are increasingly diversifying their traditional money laundering techniques involving real estate and large public works contracts, as well as new laundering methods involving cryptocurrencies and non-profit organisations, according to a report from the country’s AML body (UIAF).  Every year around $5 billion is moved through different money laundering schemes, according to the UIAF.  The article says that the shift in money laundering techniques used by criminal groups in Colombia is likely tied to the departure of the now largely demobilized FARC and the increasingly fragmented criminal landscape that its exit ushered in.

https://www.insightcrime.org/news/analysis/money-laundering-adapting-colombia-cocaine-boom/

COSTA RICA CRIME GROUPS DIVERSIFYING OIL THEFT TECHNIQUES

Insight Crime on 10th October reported that what were previously rustic oil taps are now becoming more sophisticated as groups of fuel thieves in Costa Rica are paying experts as much as $5,000 to perform professionally-made illegal oil taps on pipelines.  Oil theft is big business in Latin America, and the industry is largely considered to be a relatively low-risk, high-reward revenue stream for crime groups.  As crime groups grow stronger, the article says, it makes sense that they would venture into other, more profitable criminal activities like oil theft – but it remains to be seen if Costa Rica will face the same problems that the lucrative industry has created in Mexico.

https://www.insightcrime.org/news/brief/costa-rica-crime-groups-diversifying-oil-theft/

WHAT TO MAKE OF THE ICJ’S PROVISIONAL MEASURES IN IRAN v US (NUCLEAR SANCTIONS CASE)

An article from the Belfer Center on 4th October examined what the preliminary decision of the International Court of Justice (ICJ) on 3rd October meant or might mean.  Iran brought the case after President Trump pulled the US out of JCPOA in May and revoked sanctions relief provided in the framework of that agreement.  It explains the basis of the hearing, despite the US withdrawal from compulsory ICJ jurisdiction in 1986.  Instead Iran cited the 1955 bilateral Treaty of Amity, Economic Relations, and Consular Rights between Iran and the US as the basis for the court’s jurisdiction.

https://www.belfercenter.org/publication/what-make-icjs-provisional-measures-iran-v-us-nuclear-sanctions-case

IMPACT OF RECENT US AND EU SANCTIONS ON THE MIDDLE EAST

Baker McKenzie on 11th October published an article which highlights of the key issues businesses operating in the Middle East are grappling with.

https://globalcompliancenews.com/sanctions-roadshow-us-eu-sanctions-middle-east-20181010/

CAN EUROPE STAY CONNECTED TO IRAN?

On 10th October, the European Council on Foreign Relations published an article saying that despite the US withdrawal from the Iran nuclear deal and the re-imposition of economic sanctions, Europe remains committed to maintaining ties with Iran.  It says that it is widespread expectation that several Iranian private banks and the Central Bank of Iran will be designated entities under the US sanctions measures.  It looks at the problems for banks, large and small, and the possible solutions or ways around the US sanctions and asks if the proposed European “special purpose vehicle” (or vehicles) could work.  It does say that US officials have stressed that US sanctions will target European central banks and SWIFT.

https://www.ecfr.eu/article/commentary_bankless_task_can_europe_stay_connected_to_iran?utm_content=buffercd483&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

EU IS REPORTEDLY SET TO PUBLISH GUIDANCE FOR MEMBER STATES ON HOW TO MANAGE ‘GOLDEN VISAS’

KYC 360 on 11th October reported that the guidance would follow amid growing concerns that such visas are being used by rich criminals to live and move around Europe easily, and that they also pose a high risk of money laundering.  It is expected to include ‘necessary background checks’ for applicants across the bloc, as opposed to different requirements laid out by national laws.

https://kyc360.com/news/money-laundering-eu-to-introduce-due-diligence-checks-for-golden-visas/

UK: SHARP RISE IN CRIMINALS USING YOUTHS’ BANK ACCOUNTS TO LAUNDER CASH

KYC 360 on 11th October reported that anti-fraud organisation Cifas is calling on banks to do more to warn young people of the dangers of being used as money mules, after figures showed that there has been a huge leap in the number of young people being targeted with a 26% increase over the previous year.

https://kyc360.com/news/uk-sharp-rise-in-criminals-using-youths-banks-accounts-to-launder-cash/

FRAUDULENT FOREX SCHEME IN TEXAS

An article on Mondo Visione on 10th October detailed how the Texas Securities Board entered an action against Go Forex Group.  The action found Go Forex Group was illegally soliciting investments in a forex, real estate and oil and gas programme.  It is alleged that Go Forex Group was proving investors with a fake address for its business offices; it published a certificate of incorporation that falsely claims the firm was incorporated in Michigan but was found to be created using image-editing software to make changes to a government record for an unrelated corporation organised in Belize; found to be publishing false testimonials, including a fake testimonial from a contributor to National Public Radio.

http://www.mondovisione.com/media-and-resources/news/texas-action-against-fraudulent-forex-scheme/

AML SUPERVISION – A STRONGER ROLE FOR THE EBA?

McCann Fitzgerald on 28th September published an article saying that the EU is proposing to strengthen the role of the European Banking Authority (EBA) in the supervision and enforcement of AML/CFT rules.  Among other things, proposals would empower the EBA to request national supervisors to investigate suspected breaches of AML requirements and, in some circumstances, to require financial sector operators to comply with their AML obligations.  The article says that the Commission is calling on the Parliament and the Council to endorse the actions set out and to adopt the relevant legislative proposals by early 2019 at the latest.

https://www.mccannfitzgerald.com/knowledge/asset-management-and-investment-funds/aml-supervision-a-stronger-role-for-the-eba

EU COUNCIL AGREES ITS POSITION ON DIRECTIVE ON BUSINESS INSOLVENCY

On 11th October, a news release from the EU advised that the Council had agreed its position on the business insolvency directive. The Directive aims at providing access by viable enterprises in financial difficulties to preventive restructuring frameworks to enable them to restructure at an early stage, and so prevent insolvency.  It also gives reputable bankrupt entrepreneurs a second chance, and introduces measures to increase the efficiency of restructuring, insolvency and discharge procedures.  It is hoped to have the Directive in force in early 2019.

https://www.consilium.europa.eu/en/press/press-releases/2018/10/11/directive-on-business-insolvency-council-agrees-its-position/

HERE’S HOW IRAN HIDES ITS SECRET OIL TRADE

Forbes on 11th October published an article saying that, despite US efforts and the risk of further efforts, new data on oil shipments from the month of September reveals a picture of the Iranian oil industry that is still robust.  A new report claims that Iran has actually been exporting much more oil to many more destinations than we have been led to believe.  The report comes from TankerTrackers, an online service that monitors oil tankers around the globe, usually via satellite, and has been following Iran’s oil storage and exports since 2015.  ran exported at least 2 million barrels per day of oil in the month of September, which is actually an increase from its exports in August.  Its latest report is said to be is one of the most comprehensive account of Iranian oil movements.  The articles cites one example illustrating how exports can be disguised, where a tanker is first seen picking up Iranian condensates and Iranian oil before loading up its remaining space with Kuwaiti oil and then heading to Japan – it can appear to be a tanker of Kuwaiti oil, but, in fact, it carries a significant amount of Iranian oil.

https://www.forbes.com/sites/ellenrwald/2018/10/11/heres-how-iran-hides-its-secret-oil-trade/?src=ilaw#5271ab5f363f

TankerTrackers is at –

https://tankertrackers.com/

RUSSIA: INVESTIGATORS SEEK TO DETAIN VICE-PRESIDENT OF AIRCRAFT CORPORATION

The RAPSI news agency in Russia on 11th October reported that investigators have asked a Moscow court to detain a vice-president for special-purpose aviation of the United Aircraft Corporation, Sergey Gerasimov, as part of a large-scale fraud case.  The company, established in 2006, is composed of about 30 entities with its activity being focused on the production of military goods for Russia’s Defense Ministry and foreign contractors.

http://rapsinews.com/judicial_news/20181011/289024313.html

UAE-BASED MASHREQBANK FINED $40 MILLION IN NEW YORK OVER MONEY LAUNDERING ALLEGATIONS

Retail Banker International on 11th October reported that Mashreqbank has agreed to pay $40 million to the New York State Department of Financial Services (DFS). This is to resolve charges of breaching AML laws.  In addition to the penalty, the bank is required to hire a third-party compliance consultant to address the deficiencies.  It is also required to deploy a ‘lookback consultant’ to carry out a comprehensive review of the New York branch’s transaction clearing activity between April 2016 and September 2016.

https://www.verdict.co.uk/retail-banker-international/news/mashreqbank-fined-money-laundering

OECD PUBLISHES MUTUAL AGREEMENT PROCEDURE STATISTICS FOR 2017

Accountancy Daily on 11th October reported that the OECD has published the 2017 Mutual Agreement Procedure (MAP) statistics covering 85 jurisdictions and most MAP cases worldwide.  Improving the effectiveness and timeliness of dispute resolution mechanisms is the aim of Action 14 of the Base Erosion and Profit Shifting (BEPS) Action Plan.

https://www.accountancydaily.co/cch_uk/cln/news_007059_oecd_mutual_agreement_procedure_statistics_2017

The statistics are at –

http://www.oecd.org/tax/beps/oecd-releases-2017-global-mutual-agreement-procedure-statistics.htm

with statistics and diagrams at –

http://www.oecd.org/tax/dispute/mutual-agreement-procedure-statistics.htm

ESTONIA MONEY LAUNDERING RISK SECOND LOWEST IN WORLD – DESPITE DANSKE BANK

ERR on 11th October reported that Estonia ranks second lowest globally in money laundering and terrorism financing risks, according to the Basel Anti-Money Laundering Index, in spite of the recent Danske Bank money laundering case affecting the Estonian branch of the bank.  Estonia lies second (out of 129) after Finland with a risk score of 2.73 (the lower the score, the better).

https://news.err.ee/868214/estonia-money-laundering-risk-second-lowest-in-world

ASIA PACIFIC GROUP SAYS PAKISTAN NEEDS TO ‘DO MORE’ TO GET OUT OF FATF GREY LIST

Pakistan Today on 11th October reported that an Asia Pacific Group (the relevant regional FATF-style body) team carrying out a further evaluation has recommended that Pakistan is seemingly dissatisfied with the country’s progress and must do more to get itself off the FATF grey list.

https://www.pakistantoday.com.pk/2018/10/11/asia-pacific-group-says-pak-needs-to-do-more-to-get-out-of-fatf-grey-list

THE CONTINUED FAILURE TO TARGET THE PROCEEDS OF THE ILLEGAL WILDLIFE TRADE IS UNDERMINING THE RESPONSE TO THIS TRANSNATIONAL CRIME

On 11th October, RUSI published an article saying that alongside the animals themselves, money moves in markets, on online platforms and between corrupt officials.  This illegal trade does not only affect wildlife: it is organised financial crime run on an industrial scale for profit.  It says that the UN Office on Drugs and Crime and RUSI has highlighted an ongoing lack of engagement with the financial dimension of this crime, with initiatives for financial crime courses run by a range of multilateral actors.  It says that another promising initiative is the establishment of a financial taskforce led by United for Wildlife, bringing together more than 30 international banks in a communal pledge to identify and share intelligence on illicit financial flows connected to the illicit trade.  However, it says that taking action to identify the illicit proceeds and the use of financial investigation, confiscation laws and money-laundering charges to tackle criminals’ ill-gotten gains must be prioritised if the ‘financial’ appeal of the trade is to be addressed – put simply, is says, the low risk/high reward equation that currently characterises IWT needs to be reversed.  It puts forward steps that need to be taken.

https://rusi.org/commentary/missing-page-strengthening-response-illegal-wildlife-trade

STOLEN MOTOR VEHICLES: INTERPOL SUPPORTS AUSTRIAN OPERATION

On 11th October, an Interpol news release reported that INTERPOL has supported an operation (Operation Austrocar) led by Austria’s Ministry of Interior over 3 days in September targeting motor vehicle crime, including the smuggling of stolen vehicles, spare parts and document fraud.  It involved vehicle checks at border points between Austria and the Czech Republic, Hungary and Slovakia, with nearly 13,000 checks relating to spare parts, vehicles, documents and individuals, leading to the seizure of 15 stolen vehicles, including one valued at more than €100,000.  In less than 2 weeks, the international operation led to the identification of 500 stolen cars and 26 motorcycles; seizure of 712 kg of heroin and 540 kg of cannabis; seizure of 9 weapons and 500 bullets; arrest of 140 suspected people smugglers; and detection of 230 fraudulent documents.

https://www.interpol.int/News-and-media/News/2018/N2018-111

CHINA CENTRAL BANK CREATES AML REGULATIONS FOR ONLINE FINANCIAL INSTITUTIONS

Baker McKenzie on 11th October reported that the People’s Bank of China has announced new AML/CFT regulations for online financial institutions from 1st January.

http://www.riskandcompliancehub.com/china-central-bank-creates-aml-regulations-for-online-fis/

NEW YORK STATE ASSEMBLYMAN CHARGED WITH TAKING BRIBE

Baker McKenzie on 11th October reported that Republican New York state Assemblyman Joseph Errigo, 79, has been charged with taking a bribe to introduce legislation that would have helped a developer.

http://www.riskandcompliancehub.com/new-york-state-assemblyman-charged-with-taking-bribe/

BEARDED FRENCH HIPSTER JAILED FOR 20 YEARS AFTER ADMITTING TO BEING DARK WEB DRUG DEALER ‘OXYMONSTER’

Illicit Trade on 11th October reported that a French hipster Guy Vallerius, 36. who sports a distinctive long red beard has been jailed in the US after admitting to being a dark web drug dealer known online as “Oxymonster”.  He was arrested in August 2017 while travelling to a beard and moustache contest in the US.  He was sentenced to 20 years in a Miami federal court having pleaded guilty to 2 conspiracy charges of distributing drugs and money laundering while acting as a “senior moderator” on dark web marketplace Dream Market.

https://www.illicit-trade.com/2018/10/bearded-french-hipster-jailed-for-20-years-after-admitting-to-being-dark-web-drug-dealer-oxymonster/

WANTED

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FinCEN ADVISORY ON THE IRANIAN REGIME’S ILLICIT AND MALIGN ACTIVITIES AND ATTEMPTS TO EXPLOIT THE FINANCIAL SYSTEM

On 11th October, FinCEN issued a new Advisory that it says is to help US financial institutions (particularly banks; money services businesses (MSB), such as virtual currency administrators and exchangers; and dealers in precious metals, stones, and jewels) better detect potentially illicit transactions related to Iran.  Further, it says it will also help foreign financial better understand the obligations of their US correspondents, avoid exposure to US sanctions, and address the AML/CFT risks that Iranian activity poses to the international financial system.  It refers to alleged involvement of the Central Bank and exchange houses to facilitate malign activity and the use of its procurement networks, including –

  • printing equipment and materials used for counterfeiting currency,
  • dual-use equipment procurement for ballistic missile proliferation,
  • Iranian airlines and their agents and affiliates have used deceptive schemes to procure aviation-related materials using front companies
  • Iran-related shipping companies’ access to the financial system
  • Iran has previously used precious metals, such as gold, to evade .. sanctions and facilitate the sale of Iranian oil and other goods abroad
  • while the use of virtual currency in Iran is comparatively small at present, virtual currency is an emerging payment system that may provide potential avenues for individuals and entities to evade sanctions.

It refers to FATF findings relating the country’s AML/CFT regimes (though currently Iran is seeking FATF membership and to amend its legislation accordingly); and to Red Flags related to deceptive Iranian activity and the above elements; and to the US sanctions regime.

https://www.fincen.gov/sites/default/files/advisory/2018-10-11/Iran%20Advisory%20FINAL%20508.pdf

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6th MONEY LAUNDERING DIRECTIVE – EU ADOPTS TOUGHER RULES

On 11th October, the EU Council adopted a new Directive focused on the criminal penalties and investigation of money laundering and the provisions of which include –

  • establishing minimum rules on the definition of criminal offences and sanctions relating to money laundering. Money laundering activities will be punishable by a maximum term of imprisonment of 4 years, and judges may impose additional sanctions and measures (e.g. temporary or permanent exclusion from access to public funding, fines, etc.).  Aggravating circumstances will apply to cases linked to criminal organisations or for offences conducted in the exercise of certain professional activities;
  • the possibility of holding legal entities liable for certain money laundering activities which can face a range of sanctions (e.g. exclusion from public aid, placement under judicial supervision, judicial winding-up, etc.); and
  • removing obstacles to cross-border judicial and police co-operation by setting common provisions to improve investigations. For cross-border cases, the new rules clarify which Member State has jurisdiction, and how those States involved co-operate, as well as how to involve Eurojust.

Once the Directive is published in the EU Official Journal, Member States have up to 24 months to transpose it into national law.

https://www.consilium.europa.eu/en/press/press-releases/2018/10/11/new-rules-to-criminalise-money-laundering-activities-adopted/

http://data.consilium.europa.eu/doc/document/PE-30-2018-INIT/en/pdf

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REFORMING ADMINISTRATION OF THE UK HORSERACE BETTING LEVY

On 10th October, the Department for Digital, Culture, Media and Sport published a news release detailing the proposal to reduce administrative inconveniences and financial costs on those affected by the Levy.  The draft Order will transfer responsibility for Levy assessment, collection and enforcement to the Gambling Commission, and pass responsibility for application of Levy funds to a body to be designated by the Secretary of State from April 2019. The reforms will result in the closure of the Horserace Betting Levy Board.  The draft Order was laid before Parliament on 9th October.  The Board was established in 1961 and is required to assess and collect a statutory levy from the gross profits of bets taken on British horseracing.  People forget that the levy was introduced to offset the decline in race day revenue for the racing industry following the legalisation of bookmakers’ off-course operations, which had meant that people wishing to place a bet on a horse race no longer needed to attend the racecourse.  The 10% levy now also extends to offshore online bookmakers – which significantly boosted the Board’s income.

https://www.gov.uk/government/consultations/consultation-on-the-use-of-a-legislative-reform-order-to-reform-the-administration-of-the-horserace-betting-levy

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UK: ANNUAL REPORT BY THE INDEPENDENT REVIEWER OF TERRORISM LEGISLATION

On 10th October, Max Hill QC, Independent Reviewer of Terrorism Legislation, has published his last annual report before departing the post to become DPP.  It reviews the operation in 2017 of the Terrorism Act 2000, Terrorism Act 2006, Terrorist Asset Freezing Act 2010 and Terrorism Prevention and Investigation Act 2011.

https://www.gov.uk/government/publications/the-terrorism-acts-in-2017

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‘MALTA HAS BECOME A CROSSROAD OF ILLEGAL TRAFFICKING’ – ITALIAN POLICE

The Times of Malta on 10th October reported that Malta has been pinpointed as being at the centre of illicit smuggling across the Mediterranean by an international police investigation led by Italy’s Guardia di Finanza.  Italian journalists from the Investigative Reporting Project Italy (IRPI) looked into rafts of classified documents and Italian police intelligence, documenting a dozen major smuggling busts in the last decade run by Maltese citizens and transacted just off Malta’s shores or supported by Maltese shipyards that service vessels used in international maritime crime.  A particular wharf in the far end of the Grand Harbour, Il-Moll tal-Pont, was picked out as a hotspot.  The articles cite several sea smuggling cases involving diesel fuel, drugs and cigarettes.

https://www.timesofmalta.com/articles/view/20181010/local/malta-has-become-a-crossroad-of-illegal-trafficking-italian-police.691276

see also the OCCRP report of 10th October –

https://www.occrp.org/en/thedaphneproject/malta-a-modern-smugglers-hideout

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EU PROMOTES EXPORT CONTROLS AND SANCTIONS COMPLIANCE PROGRAMMES

On 9th October, the Steptoe International Compliance Blog published a post which explained that the EU had released draft guidance on the core elements that industry should take into account when implementing internal export controls and sanctions compliance programmes.  A public consultation until 15th November provides EU exporters the chance to comment on its core elements by completing an online survey.  Internal control programmes (ICP) are increasingly viewed in the EU as a key element for an effective export control system.  ICP guidelines have been introduced by some Member States as a tool to better monitor compliance with EU and national export controls.  The EU Dual Use Regulation Recast Proposal formally introduces standardised operational ICP as part of the assessment in the granting and control of global export authorisations and certain general export authorisations.  The article summarises the proposals and compares them to the US system.

https://www.steptoeinternationalcomplianceblog.com/2018/10/eu-promotes-export-controls-and-sanctions-compliance-programs/#page=1

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 10

10th October 2018

 £14 MILLION COCAINE HAUL SMUGGLED IN LORRY FROM HOLLAND TO LIVERPOOL

The Liverpool Echo on 9th October carried a report about a case where photographs show “massive” 84 kg shipment which saw father and son jailed.  4 men were jailed for nearly 37 years in total after police discovered the 84 kg load when they raided an industrial unit in Speke in February.

https://www.liverpoolecho.co.uk/news/liverpool-news/14m-cocaine-haul-smuggled-lorry-15259828

2 BUSINESSMEN SMUGGLED €2.9 MILLION IN COUNTERFEIT BANKNOTES INTO DUBAI FROM ITALY

Gulf News on 10th October reported that in July a customs inspector at Dubai International Airport stopped a 51-year-old Pakistani businessman and discovered unusually thick paper bundles in his bag during scanning and when the inspector opened the bag he discovered huge quantities of €500 banknotes.  The banknotes turned out to be fake and when the businessman was asked about the source of those fake Euros, he alleged that he had taken them from his 36-year-old countryman.

https://gulfnews.com/news/uae/courts/two-businessmen-smuggled-2-9-million-in-fake-banknotes-1.2288011

PROFESSIONS MOST LIKELY TO LAUNDER MONEY IN GREECE

Ekathimerini on 9th October reported that estate agents, accountants, notaries, the banking sector and money transfer providers are categorised as high-risk for money laundering in Greece, according to a Finance Ministry report on assessing the national risks of money laundering and terrorist financing.  The list of high-risk professions also includes traders of expensive goods.  It says that investigations in the last 5 years have shown an increase in fraud, corruption and bribery at organisations and corporations.  The illegal economy in Greece is estimated at about 20% of the national income – i.e. more than €36 billion p.a.

http://www.ekathimerini.com/233463/article/ekathimerini/business/professions-most-likely-to-launder-money

HMRC FACTSHEET: PUBLISHING DETAILS OF DELIBERATE DEFAULTERS

On 10th October, HMRC issued an updated version of factsheet CC/FS 13 which contains information about when HMRC may publish the details of people who deliberately get their tax affairs wrong.

https://www.gov.uk/government/publications/compliance-checks-publishing-details-of-deliberate-defaulters-ccfs13

LOW-THC CANNABIS PRODUCTS BEING SOLD IN THE EU – KEY LEGAL ISSUES

On 9th October, a news release from the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) said that since 2017 herbal cannabis and cannabis oils have been offered for open sale in health food shops or specialist shops in several EU countries, including France, Italy, Luxembourg and Austria.  Sales have taken place based on the claim that these products have little or no intoxicating effect and therefore are not controlled under drug laws.  The news release examines the situation in respect of both international drug laws – noting that a WHO expert committee on drug dependence recently recommended that pure CBD (the other active cannabinoid in cannabis) should not be listed under the drug conventions.  In the EU, farmers can grow cannabis for other uses, e.g. hemp, as long as THC content does not exceed 0.2 %, and there are several Directives and Regulations that might address the sale of low-THC products.  The news release then consider Member States’ responses, noting that countries differ in their response towards low-THC products and have developed different responses towards products containing CBD.

http://www.emcdda.europa.eu/news/2018/low-thc-cannabis-products-being-sold-in-the-EU–key-legal-issues_en

A page on the EMCDDA website contains much more information on cannabis and cannabis policy.

http://www.emcdda.europa.eu/publications/topic-overviews/cannabis-policy/html#section4

ISRAEL: 2 GOVERNMENT OFFICIALS ARRESTED IN CORRUPTION PROBE

The Jerusalem Post on 10th October reported that 2 senior officials from the Israel Land Authority were among 7 suspects arrested as part of an ongoing investigation into corruption in the public sector.  The officials are suspected of receiving bribes in exchange for illegally providing information in order to advance the interests of others.

https://www.jpost.com/Israel-News/Two-government-officials-arrested-in-corruption-probe-569034

SON OF THAILAND’S FORMER PM THAKSIN FACES MONEY LAUNDERING INDICTMENT

Reuters on 10th October reported that Panthongtae Shinawatra, 38, (aka “Oak”), son of fugitive former Thai prime minister, Thaksin Shinawatra, faces an indictment for money laundering, in a move his supporters called politically motivated.

https://www.reuters.com/article/us-thailand-politics-shinawatra/son-of-thailands-former-pm-thaksin-faces-moneylaundering-indictment-idUSKCN1MK0L3

SOUTH AFRICAN MINISTER STEPS DOWN AMID CORRUPTION ALLEGATIONS

Telesur on 9th October reported that Tito Mboweni will be replacing Nhlanhla Nene as finance minister after a public announcement revealed the former’s illicit association with the Gupta family, accused of large-scale corruption in the region.

https://www.telesurtv.net/english/news/South-African-Minister-Steps-Down-Amid-Corruption-Allegations-20181009-0027.html

KAZAKHSTAN: SHELL LOST INTEREST IN ACQUISITION OF KMG SHARES DUE TO CORRUPTION RISKS

KazhTag reported 10th October a story from Dutch newspaper De Telegraaf saying that Royal Dutch Shell has lost interest in acquisition of stake in state-owned KazMunayGas (KMG), which is preparing to enter the stock market in 2019, due to corruption risks.

https://www.kaztag.kz/en/news/shell-lost-interest-in-acquisition-of-kmg-shares-due-to-corruption-risks-mass-media

TAX AVOIDANCE: RECENT DEVELOPMENTS

On 9th October, the House of Commons Library briefing a briefing paper which provides an introduction to the issue of tax avoidance, looking in detail at the development of follower notices and accelerated payments, before discussing the current UK Government’s approach.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7948

A TREATY ON THE PROHIBITION OF NUCLEAR WEAPONS

On 9th October, the House of Commons Library produced a briefing paper which says that the Treaty was adopted in the UN on 7th July 2017.  However, none of the nuclear weapon states participated in those discussions and have declared their intention not to sign and ratify the new treaty.  The lack of engagement by the nuclear weapon states raises the question of what this treaty can then realistically achieve?  The Treaty will come into force 90 days after 50 countries have ratified it.  To date, the treaty has 69 signatories, including 19 States Parties, 3 of which signed and ratified the treaty on the first day.  Along with the other nuclear powers, the British Government did not participate in the UN talks and has indicated its refusal to sign and ratify the new treaty.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7986

ROMAN ABRAMOVICH LOSES BATTLE HIS WITH AUTHORITIES OVER A TAX BILL ON HIS FRENCH CHATEAU

Daily Mail on 10th October reported that Roman Abramovich has lost a fight with French tax authorities over his £87 million Riviera getaway, Château de la Croë, having spent years battling authorities over a £1 million tax bill.  He bought the villa on Billionaire’s Bay – the Cap d’Antibes – in 2001 and has spent £30 million renovating it.

https://www.dailymail.co.uk/news/article-6258999/Roman-Abramovich-loses-battle-French-taxman-undervaluing-Riviera-chateau.html

UK – EXPORTING FOOD, DRINK AND AGRICULTURAL PRODUCTS: SPECIAL RULES

On 9th October, DEFRA issued updated guidance to help producers/exporters to check if they need a certificate to export food, drink and agricultural products.

https://www.gov.uk/guidance/export-food-and-agricultural-products-special-rules

INTERPOL-LED OPERATION TO DISRUPT THE MOVEMENT OF ILLICIT WEAPONS IN THE MIDDLE EAST AND NORTH AFRICA: 115 ARRESTS AND SEIZURE OF FIREARMS, DRUGS AND CASH

On 9th October, a news release from Interpol reported on Operation Trigger IV which took place across four countries in the region – Iraq, Jordan, Lebanon and Morocco.  Checks were carried out at known trafficking hotspots including land, air and sea border points.  More than 20,000 checks were conducted against INTERPOL’s global databases during the 9-day operation, including those for wanted persons, stolen and lost travel documents, stolen motor vehicles, facial recognition and suspected or known terrorists, resulting in 5 positive ‘hits’.  57 firearms were recovered and 17 individuals arrested for firearms offences.  Authorities also seized cash in several currencies totalling €1.3 million, and nearly 6 kg of pure heroin and 400 synthetic pills were recovered, representing a street value of nearly €200,000.

https://www.interpol.int/News-and-media/News/2018/N2018-109

JAPAN FACING CUSTOMS OFFICER SHORTAGE AS FOREIGN VISITORS SURGE

The Japan Times on 10th October reported that the number of foreign tourists is expected to rise further toward the 2020 Games, the Finance Ministry hopes to boost the number of customs officers by 263 in fiscal 2019, which begins next April, from 9,387 at the start of fiscal 2018.  Another factor behind the shortage of customs officers is said to be an increase in gold smuggling stemming from soaring gold prices – cases detected in 2017 rose 66% from the previous year to a record 1,347, with the amount of gold seized jumping more than twofold to 6,236 kg, also a record high.

https://www.japantimes.co.jp/news/2018/10/10/national/japan-facing-customs-officer-shortage-foreign-visitors-surge/#.W72yA_ZFx9B

AUSTRALIAN DRUG BUST NETS HALF A TONNE OF ECSTASY

News.com in Australia on 8th October reported that Australian Federal Police and Australian Border Force offers have seized 496 kg of the drug ecstasy worth $57 million in a joint operation in Sydney.  The drugs were hidden inside 4 industrial meat mincing machines and smuggled into Australia from Turkey in a shipping container.

https://www.news.com.au/national/breaking-news/nsw-drug-bust-nets-half-a-tonne-of-ecstasy/news-story/86e0bca0de97c9a5123fa3714d584dc8

CROSS-BORDER MAIL ORDER TRADING: NEW SWISS VAT RULES FROM 1ST JANUARY

On 8th October, Pestalozzi Attorneys at Law published an article on changes affecting low-value imports into Switzerland by mail.  Currently, low-value supplies of goods from abroad to Switzerland are neither subject to Swiss import VAT nor to Swiss domestic VAT if below SF5 in charges – equating to around SF65 at the standard VAT rate of 7.7%.

https://pestalozzilaw.com/en/news/legal-insights/cross-border-mail-order-trading-new-swiss-vat-rules-1-january-2019/

BELGIAN FOOTBALL CLUBS RAIDED IN POLICE INQUIRY INTO ALLEGED FRAUD

On 10th October, the BBC reported that several of Belgium’s top football clubs have been raided as part of a police investigation into alleged fraud involving the transfer of players. Agents, referees and officials from top clubs including Anderlecht, Club Bruges and Standard Liege are being investigated, Belgian media report.  More than 200 police officers took part in raids across several countries.  Police also raided properties in France, Luxemburg, Cyprus, Montenegro, Serbia and Macedonia, prosecutors said in a statement.

https://www.bbc.co.uk/news/world-europe-45811859

“MULTI-MILLION DOLLAR FRAUD” IN RUSSIA’S FOREX MARKET

The Moscow Times on 10th October reported that Russian police have uncovered a massive fraud scheme at one of Russia’s foreign exchange markets suspected of embezzling more than 1,000 people.  The suspects used an unidentified brand to attract investments under the guise of providing services in the forex market.

https://themoscowtimes.com/news/police-uncover-multimillion-dollar-fraud-russias-forex-market-reports-63142

CRYPTOCURRENCY THEFT HITS NEARLY $1 BILLION IN FIRST 9 MONTHS: REPORT

Reuters on 10th October reported that a report from U.S.-based cyber security firm CipherTrace claimed that theft of cryptocurrencies through hacking of exchanges and trading platforms soared to $927 million in the first 9 months of the year, up nearly 250% from the level seen in 2017.

https://www.reuters.com/article/us-crypto-currency-crime/cryptocurrency-theft-hits-nearly-1-billion-in-first-nine-months-report-idUSKCN1MK1J2

SOUTH AFRICA: EXPLOSIVE REPORT INTO VBS MUTUAL BANK REVEALS LARGE-SCALE ‘LOOTING’

News 24 on 10th October reported that a final investigation report into large-scale fraud at VBS Mutual Bank has recommended that more than 50 individuals be criminally charged and held liable in civil proceedings, following the bank’s implosion earlier this year.  It says the criminal charges should stem from evidence of fraud, corruption and bribery perpetrated by the bank’s leadership and public officials.

https://www.news24.com/SouthAfrica/News/explosive-report-into-vbs-bank-reveals-large-scale-looting-20181010

UK AID TO CRACK DOWN ON CRIMINAL GANGS DRIVING THE ILLEGAL WILDLIFE TRADE

On 10th October, DFID published a news release saying that the International Development Secretary has announced a new joint initiative with the Foreign & Commonwealth Office, to target wildlife traffickers and criminal gangs, tackling the global scourge of the illegal wildlife trade.  The UK aid project will launch investigations, seize assets and train law enforcement in East and Southern African countries and will be the largest known project of its kind to crack down on financial crimes associated with the illegal wildlife trade in the world.  Wildlife Financial Taskforce will initially comprise of representatives from 30 global banks and financial organisations such as Standard Chartered, HSBC, RBS and City Group, and agencies and regulatory bodies including TRAFFIC and RUSI.

https://www.gov.uk/government/news/uk-aid-to-crack-down-on-criminal-gangs-driving-the-illegal-wildlife-trade

MALAYSIA: PROBE INTO ILLEGAL WAREHOUSE FULL OF SMUGGLED CHICKEN WINGS 50% COMPLETED

Bernama.com on 10th October reported that the Malaysian Anti-Corruption Commission (MACC) Sarawak has completed about 50% of its probe into an illegal warehouse storing smuggled chicken wings that has been in operation for the past 30 years.  In September, a national daily reported that the warehouse had been operating illegally by smuggling frozen chicken wings from neighbouring countries, with dubious slaughtering method and marketed the product in Sarawak and Sabah.

http://www.bernama.com/en/general/news.php

US SOLAR FRAUDSTERS ORDERED TO DISGORGE $50 MILLION

OCCRP on 10th October reported that a US federal court ordered 2 men to disgorge (i. give up) over $50 million after it found them guilty of tax fraud for selling “inoperable” solar equipment to tens of customers who then cashed in on lucrative tax deductions.

https://www.justice.gov/opa/pr/federal-court-orders-tax-scheme-promoters-disgorge-50-million-gains-fraudulent-solar-energy

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/8727-us-solar-fraudsters-ordered-to-disgorge-50-million

NORTH KOREA HACKERS TRIED TO TAKE $1.1 BILLION IN BANK ATTACKS

Bloomberg on 8th October reported that a North Korean hacking group has tried to steal at least $1.1 billion in a series of attacks on global banks over the past 4 years, according to a cybersecurity firm.  APT38 has, it says, infiltrated more than 16 organizations in 11 countries including the US, and stolen more than $100 million.  The most prominent attack by APT38 was the theft of funds from the central bank of Bangladesh accounts at the US Federal Reserve in 2016.

https://www.bloomberg.com/news/articles/2018-10-08/north-korea-hackers-broke-into-banks-tried-to-take-1-1-billion

SPAIN: TRANSPOSITION OF THE 4th ML DIRECTIVE

On 10th October, Clifford Chance published an article on the law of 31st August which, amongst other things, transposes the EU 4th Money Laundering Directive into Spanish law, including ultimate beneficial ownership reporting requirements.

https://www.cliffordchance.com/briefings/2018/10/transposition_ofthefourthdirectiveonth.html

US TREASURY REGULATIONS FOR FIRMA PILOT PROGRAMME

On 10th October, the US Treasury released temporary regulations to protect critical US technology and intellectual property from potentially harmful foreign acquisitions.   These regulations put to use tools enacted as part of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which President Trump signed into law in August.  FIRRMA authorises the Committee on Foreign Investment in the United States (CFIUS)to conduct pilot programmes to implement provisions in the legislation that did not become effective immediately upon enactment.  Full implementation of FIRRMA will occur no later than February 2020.  In particular, FIRMA expands the scope of transactions subject to review by CFIUS to include certain noncontrolling investments made by foreign persons in US businesses involved in critical technologies related to specific industries.

https://home.treasury.gov/system/files/206/Fact-Sheet-FIRRMA-Pilot-Program.pdf

TRACE PODCAST: 15 YEARS OF THE UN CONVENTION AGAINST CORRUPTION

In the latest TRACE podcast, Candice Welsch of the United Nations Office on Drugs and Crime (UNODC) describes the work, progress and goals of the UN Convention Against Corruption.

https://www.traceinternational.org/bribe_swindle_or_steal

EU COURT OF AUDITORS CRITICISES EU CUSTOMS IT SYSTEMS DELAY

On 10th October, Accountancy daily reported that, as HMRC’s progress in developing the UK’s new Customs Declaration System (CDS) came under fire, a report from the European Court of Auditors (ECA) says implementation of customs IT systems in the EU has suffered from a series of delays, and some key elements will not be available for the 2020 deadline.  The European Commission set up the Customs 2020 programme to support modernisation of the Customs Union, with €523 million over 7 years, most of which is devoted to IT capacity building.

https://www.accountancydaily.co/auditors-pan-eu-customs-it-systems-delay

The ECA report: “A series of delays in Customs IT systems: what went wrong?”, is available at –

https://www.eca.europa.eu/Lists/ECADocuments/SR18_26/SR_CUSTOMS_IT_EN.pdf

REPORT TO CONGRESS ON IRAN’S FOREIGN AND DEFENCE POLICY

On 10th October, USNI News reported on the October 9th US Congressional Research Service report Iran’s Foreign and Defense Policies, also providing the text of the report.  Amongst its finding are that

  • Iran provides material support to allied governments and armed factions such as the Assad regime in Syria, Lebanese Hezbollah, Houthi rebels in Yemen, Iraqi Shiite militias, and Bahraini militant groups. Iranian officials characterize this support as helping the region’s “oppressed” and assert that Saudi Arabia, in particular, is instigating sectarian tensions and trying to exclude Iran from regional affairs;
  • has sought to use sanctions relief provided by the July 2015 multilateral nuclear agreement (Joint Comprehensive Plan of Action, JCPOA) to emerge as a regional energy and trade hub and to negotiate future weapons buys.

https://news.usni.org/2018/10/10/report-congress-irans-foreign-defense-policy-2

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REPORT: EU GOLDEN VISA PROGRAMMES IN THE FIRING LINE

Deutsche Welle on 10th October reported that over a dozen EU member countries have government schemes in place that allow wealthy foreigners to obtain residency permits in return for large investments.  Rights groups say the programmes pose risks of money laundering.  A joint report by Global Witness and Transparency International notes schemes to trade citizenship for large investments currently exist in 13 EU states: Austria, Cyprus, Luxembourg, Malta, Greece, Latvia, Portugal, Spain, Ireland, Britain, Bulgaria, the Netherlands and France – but Hungary has terminated its programme.  The report called for tighter rules and for the extension of AML rules to “all those involved in the visa-for-sale industry”.  Campaigners said acquiring passports under such schemes cost an average of €900,000, with Cyprus’ passport costing up to €2 million.  The report stated that EU nations generated around €25 billion in foreign direct investment in a decade from selling at least 6,000 passports and nearly 100,000 residency permits.

https://www.dw.com/en/eus-golden-visa-programs-in-the-firing-line/a-45823180

The report is available at –

https://www.transparency.org/whatwedo/publication/golden_visas

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ANONYMITY ORDER OVER MYSTERY ‘UNEXPLAINED WEALTH ORDER’ TARGET LIFTED

The Law Society Gazette on 10th October reported that the “Mrs A” asked under new enforcement powers involved UWO to explain how she acquired properties worth £22 million has been revealed as Zamira Hajiyeva – the wife of the former head of the International Bank of Azerbaijan, who’s husband, Jahangir Hajiyev, was sentenced to 15 years in jail in 2016 over an alleged scheme to remove billions of dollars from the bank.

https://www.lawgazette.co.uk/law/anonymity-order-over-mystery-unexplained-wealth-target-lifted/5067882.article

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UK SANCTIONS – A YEAR IN REVIEW

Eversheds Sutherland on 10th October produced a report which provides a snapshot of the work of the Office of Financial Sanctions Implementation in raising awareness of financial sanctions and addressing suspected breaches.  The statistics include –

  • UK implemented 29 financial sanctions regimes;
  • 122 new targets were added to the UK’s sanctions list, the Consolidated List;
  • OFSI received 122 reports of suspected breaches of financial sanctions;
  • as of September 2017, £12.8 billion of frozen funds were held by UK businesses; the majority of these relating to the Libyan regime;
  • over 50 new licences were issued in 2017 – 2018; over half of which were for payment of legal fees; and
  • 60+ speaking engagements were undertaken by OFSI to raise awareness of its work.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Litigation_Support/uk-sanctions

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BARRISTER WINS RIGHT TO SEE SAR HIS BANK MADE TO FIU

Legal Futures on 10th October reported that a barrister, David Lonsdale, who practises at 33 Bedford Row, has won the right to see SAR that his bank made to the NCA about money received into his accounts.  In March 2017, NatWest froze one of his joint accounts for 8 days while making a SAR to the NCA, and then in December 2017 froze them all while making more SAR.  The bank then gave Mr Lonsdale notice that it was closing his accounts.  He issued proceedings claiming breach of contract, breach of the Data Protection Act 1998 and defamation.  He also sought disclosure of personal information under the Data Protection Act and summary judgment of the breach of contract claim. Only the application to inspect the SAR succeeded.  The judge ruled that the ordinary position under the Civil Procedure Rules was that Mr Lonsdale should be given inspection of the documents that had been mentioned in the defence and statement, and that the argument that an order would involve a tipping-off offence under POCA were unsupported by any evidence.  The barrister is quoted as saying that, “To this day I have no understanding as to why the bank took the action that it did”.

https://www.legalfutures.co.uk/latest-news/barrister-wins-right-to-see-reports-his-bank-made-to-police

 

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FREE PORTS IN THE UK

The House of Commons Library has produced a paper that provides a brief overview of the subject, recent parliamentary material, press articles and further reading in advance of a debate on the establishment of free ports in the UK to be held in Westminster hall on 11th October.  It notes that –

  • Free ports (known as “free zones” under EU law) are generally understood to be designated areas inside a country geographically, but outside of that country’s established customs area, allowing manufacturing, warehousing and trade outside of the host country’s standard tariffs and export/import procedures;
  • There are estimated to be 3,500 free ports in the world, employing 66 million people;
  • There are no free ports in the UK, though there is one on the Isle of Man (though, like former UK free ports, whilst legally capable of being a “proper” free port, currently operates more like a gloried industrial estate); and
  • 7 free ports operated in the UK at various points between 1984 and 2012; the remaining 5 closed in 2012.

http://researchbriefings.files.parliament.uk/documents/CDP-2018-0211/CDP-2018-0211.pdf

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REPORT: COUNTRIES FACE RISING EXPOSURE TO MONEY LAUNDERING

The Wall Street Journal on 9th October reported that more countries are showing heightened risks of exposure to money laundering, according to an annual ranking of countries assessing their money laundering risk by the Basel Institute on Governance, which released the 7th edition of its Basel AML Indes.  It said 83 countries, or about two-thirds of those in the index, have a risk score above 5.0 and are therefore classified as having a significant risk of money laundering and terrorist financing.  The most concerning aspect of the report, according to the institute, is that countries are not enforcing the laws they have on the books to fight money laundering.  While some countries do not appear on the index, because of lack of data, Tajikistan was the top country for money laundering risk this year, followed by Mozambique, Afghanistan, Laos and Guinea-Bissau.  No country has zero risk of money laundering but the lowest-risk countries, according to the index, are Finland, Estonia, Lithuania, New Zealand and Macedonia.

https://blogs.wsj.com/riskandcompliance/2018/10/09/countries-face-rising-exposure-to-money-laundering-basel-report-finds/

https://www.baselgovernance.org/news/basel-aml-index-reveals-slow-progress-combating-money-laundering

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OIL SMUGGLING AND BLACK MARKETS

On 9th October, Yale Global online carried a report which says that a flourishing black market exists for oil products, with about $133 billion worth of fuels stolen or adulterated every year, and that this helps fund dangerous non-state actors such as the Islamic State, Mexican drug cartels, Italian Mafia, Eastern European criminal groups, Libyan militias, Nigerian rebels and more – and are a major global security concern.  It says that the top 5 countries accused of oil trafficking – Nigeria, Mexico, Iraq, Russia, and Indonesia – are also oil producers.  It is estimated that Nigeria alone loses $1.5 billion a month due to pipeline tapping, illegal production and other sophisticated schemes.  In SE Asia, about 3% of the fuel consumed is sourced from the black market, estimated to be worth up to $10 billion a year.  In Mexico, drug cartels are said to launder drug revenues through the oil trade.  It also cites non-producer Turkey, saying that it serves as a major transit route for oil flowing to Europe from countries like Iraq and Iran.  Lower oil prices in Eastern Europe have created maritime smuggling routes to the UK and Ireland – Ireland estimates it loses up to $200 million annually with fuel fraud, while up to 20% of fuel sold in regular gas stations in Greece is said to be illicit.  The article says that much of the illegal fuel trade is conducted at sea – with the transfer of illegal fuel often done ship to ship, though armed theft and piracy also occurs – with one ship commercially legal, carrying legitimate imports at the final port of destination.  The article says that the first global conference on fuel theft, held in Geneva in April, may be a watershed moment and refers to a report which it says is the most extensive examination of illicit downstream hydrocarbons activity published to date.  It concludes by saying that unless monitored and addressed by robust policy and regulation, the illegal oil activities will remain a key funding source for terrorism, organised crime, authoritarian states and violent non-state actors.

https://yaleglobal.yale.edu/content/worlds-most-dangerous-black-markets

The Atlantic Council report referred to is available at –

http://www.atlanticcouncil.org/images/publications/Downstream_Oil_Theft_web_0327.pdf

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IRISH RETAILERS SAY CIGARETTE DUTY INCREASE ONLY AIDS SMUGGLERS

The Leitrim Observer and others on 9th October carried the report that Retailers Against Smuggling (RAS) say it is in no doubt that these excise increases, which make Ireland the most expensive place in the EU to buy cigarettes, only serve to further incentivise smuggling and undermine Irish retailers.  The Budget added another 50c to the excise duty rate on tobacco, bringing the total cost of an average packet of cigarettes to €12.70.  The move comes despite the Tax Strategy Group clearly stating in July that an increase in excise duty on tobacco would not generate any additional revenue, given the resultant levels of smuggling. The Revenue’s own 2017 Tobacco Survey is said to have shown that the total amount of illegal cigarettes smoked in Ireland rose to 13%.

https://www.leitrimobserver.ie/news/business-news/340658/disappointment-again-as-government-fail-to-protect-irish-retailers.html

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 9

9th October 2018

UK NATIONAL ECONOMIC CRIME CENTRE COMMENCES OPERATIONS ON 31st OCTOBER

The UK’s National Economic Crime Centre (NECC) is due to commence operations on 31 October 2018.  Sitting within the NCA, its staff come from not only the NCA, but also HMRC, FCA, City of London Police and the private sector.  It will be responsible for leading response to financial and economic crime and the UK’s FIU also comes under its umbrella.

SOUTH KOREA CRACKING DOWN ON AMPHETAMINES FROM TAIWAN

On 8th October, Focus Taiwan reported that South Korean authorities have seized over 62 kg of amphetamines worth around $175 million, from Taiwan and said to have been smuggled into South Korea via Incheon and Gimpo airports, and indicted 20 Taiwanese nationals on related charges since February.

http://focustaiwan.tw/news/asoc/201810080030.aspx

EGYPT RECOVERS COVER OF WOODEN ANCIENT COFFIN SMUGGLED TO KUWAIT

Egypt Today on 8th October reported that since 2017, the Egyptian Ministry of Antiquities has seized and restored many ancient artefacts.  Previously, Egypt received 118 ancient Egyptian artefacts that were smuggled to Italy.  Kuwaiti Customs seized the cover of a wooden ancient coffin among an air cargo coming from Egypt.

http://www.egypttoday.com/Article/4/58656/Egypt-recovers-cover-of-wooden-ancient-coffin-smuggled-to-Kuwait

http://www.arabtimesonline.com/news/kuwait-returns-smuggled-rare-pharaohesque-artifact-to-egypt/

TAIWAN: CAPTAIN OF FISHING BOAT SENTENCED TO 12 YEARS FOR SMUGGLING KETAMINE

Taiwan News on 8th October reported that over a tonne of ketamine was seized from the fishing boat in February what was the largest recorded drug bust Taiwan had seen.  The 63-year-old captain was detained by police and the 5 Indonesian crew members were arrested but later turned over to their hiring agency.  It is said that 126 black plastic bags were thrown from a Chinese fishing boat into the sea and recovered by the Taiwanese boat.

https://www.taiwannews.com.tw/en/news/3547682

BVI HIRES $400,000 LAWYER TO AVOID EU’S BLACKLIST

International Investment reported on 1st October that the BVI has retained a UK attorney, Michael Furness QC, at a cost of up to $400,000 to draft a piece of legislation in the field of ‘economic substance’, in other words the existence of a tax regime without any real economic activity underpinning it, for the territory’s financial services industry as it needs to meet EU requirements to avoid being put on a blacklist.

http://www.internationalinvestment.net/regions/caribbean/bvi-hires-400000-lawyer-to-avoid-eus-blacklist/

NEW ZEALAND: SFO ALERTED AND PROPERTY SYNDICATE’S FORMER DIRECTOR’S ASSETS FROZEN

Stuff on 9th October reported that alleged “accounting anomalies” has seen a High Court judge freeze the assets of a former director of 3 property syndicates which own millions of dollars of commercial property, including a high-profile Auckland high-rise.  The director and syndicates are named as Neil Barnes, First NZ Properties, Superstore Properties and Springs Road Property.

https://www.stuff.co.nz/business/107635618/.html

HOW LONG DOES THE IRS HAVE TO PURSUE TAX FRAUD?

Forbes on 8th October carried an article answering this question, in the light of Trump family revelations, saying that the normal 6-year limitation period can be overridden where the taxpayer filed a false tax return, the taxpayer wilfully attempted to illegally evade paying taxes or the taxpayer failed to file a tax return.  If pursued purely as a civil monetary matter, the article points out, the 6-year time limit can be expanded to an unlimited amount of time.

IRS

Statute of Limitations Chart: Copyright 2018 Gassman, Crotty & Denicolo, P.A.

https://www.forbes.com/sites/alangassman/2018/10/08/how-long-does-the-irs-have-to-pursue-tax-fraud

CHECK IF YOU NEED A UK VISA

UK Visas & Immigration on 8th October published an updated application allowing one to check if you need a visa to visit the UK, and what documents that are needed whether you do or not.

https://www.gov.uk/check-uk-visa

PACIFIC INTERNATIONAL LINES AND IBM SINGAPORE TO DEVELOP A BLOCKCHAIN-BASED ELECTRONIC BILL OF LADING

Lloyds Loading List on 8th October reported that the partners are to develop a blockchain-based electronic bill of lading that will cut the traditional paper trail and streamline the process.  The article explains that a bill of lading, and as old as trading itself, is intrinsic to trade financing.  It is usually mailed to various parties, leaving it open to fraud, loss of the original document, document handling costs and various other constraints that result in inefficiencies across the supply chain.  PIL and IBM have proposed using an electronic Bill of Lading to streamline and replicate the paper trail online on a blockchain ledger created by IBM. The e-BL will do away with the hard copy paper trail, cut unnecessary handling costs and the possibility of fraud.  Earlier this year the parties successfully completed a trial using IBM’s Blockchain Platform, to track and trace a cargo movement.  The team plans to extend the e-BL to shadow an end-to-end shipment in real time.

https://www.lloydsloadinglist.com/freight-directory/news/PIL-and-IBM-to-develop-electronic-bill-of-lading/72981.htm#.W7xgd_ZFx9A

UK GAMBLING COMMISSION PUBLISHES NEW ADR STANDARDS FOR GAMBLING DISPUTES

CMS Law on 8th October published an article saying that on 1st October, the Gambling Commission published new guidance on alternative dispute resolution procedures in the gambling sector.  The article provides a link to the guidance details its contents.  It explains that ADR processes (such as mediation or adjudication) enable gambling operators and consumers to resolve disputes without going to court; and that, in the gambling sector, ADR is only used to resolve “disputes” – a type of complaint about either contractual obligations in sales or services contracts or the customer’s gambling transaction (including management of the transaction and related customer accounts) that has not been resolved through normal complaints procedures.  The guidance takes effect from 31st October, along with licence conditions and a code of practice requiring operators to improve their complaints processes, including the imposition of an 8-week deadline for complaints to be resolved.

http://www.cms-lawnow.com/ealerts/2018/10/gambling-commission-publishes-new-adr-standards-for-gambling-operators?cc_lang=en

UK CORPORATE INSOLVENCY REFORMS: WHAT YOU NEED TO KNOW

Allen & Overy has published a briefing about planned changes to the insolvency framework in the UK, saying that some of the proposed changes could be significant for borrowers, creditors and distressed investors, potentially impacting their decision-making in future restructuring scenarios – though the reforms are unlikely to be imminent and key questions remain as to their detailed provisions.  The briefing summarises, and provides the law firm’s initial thoughts on, the key reforms set out in the UK Government response on 26th August to submissions to the consultation on Insolvency and Corporate Governance issued in March.

http://www.allenovery.com/SiteCollectionDocuments/UK_Corporate_Insolvency_Reforms_Factsheet.pdf

INTERNATIONAL ILLEGAL LOGGING – A RISK FOR RETAILERS

On 9th October, The Lawyer published an article from Walker Morris saying that 2 recent prosecutions by the Office for Product and Safety Standards (OPSS) highlight that the Timber and Timber Products (Placing on the Market) Regulation 2013, implementing the EU Timber Regulation, could represent a real risk.  The EU Timber Regulation has been enacted to counter trade in illegally harvested timber and timber products by imposing a number of criminal offences.  Any retailer whose business involves the buying or selling of timber for commercial purposes, or otherwise placing internationally-sourced wood or wood products on to the market needs to comply with the Regulations.

https://www.walkermorris.co.uk/publications/why-international-illegal-logging-might-represent-a-risk-for-retailers/

FIATA BEST PRACTICES GUIDE FOR CONTAINER SHIPPING FOCUSING ON THE CHARGING OF DEMURRAGE AND DETENTION

An e-Flash from FIATA on 8th October reported that the organisation had published a guide which provides best practices that may help reduce supply chain costs and inefficient operations leading to unnecessary detention and demurrage charges.

https://fiata.com/media/press-releases/2018/3-october.html

BAUXITE MINING BOOM IN GUINEA THREATENS HUMAN RIGHTS AND LIVELIHOODS

Ekklesia on 9th October reported that Guinea’s fast-growing bauxite mining industry (for aluminium production) is threatening the livelihoods of thousands of Guineans, according to a recent report from Human Rights Watch (HRW): What Do We Get Out of It?. It says that mining has destroyed ancestral farmlands, damaged water sources and coated homes and trees in dust.  Recent developments have transformed Guinea into the world’s third-largest exporter, and its government should take immediate steps to better regulate companies and protect communities, says HRW.  It says that Guinea has an abundance of natural resources, including the world’s largest bauxite reserves, but remains one of the world’s poorest countries.  The demand for Guinean bauxite in global markets has increased in recent years as other countries, notably Indonesia and Malaysia, banned exports, in the latter case partly due to the industry’s environmental impact.  Guinea is already the biggest exporter of bauxite to China, the world’s largest aluminium producer; and with several new mining projects preparing to begin exports, Guinea’s bauxite boom shows no sign of slowing down.

http://www.ekklesia.co.uk/node/26946

The report is available at –

https://www.hrw.org/

CHECKLISTS OF FOREIGN COUNTRIES SUBJECT TO SANCTIONS

In March 2018, Thompson Coburn LLP published this checklist of countries that are subject to a variety of US and EU-imposed restrictions affecting international trade.  The countries are grouped into different categories based upon their nature; several of the countries are subject to more than one category of restriction.

https://www.thompsoncoburn.com/insights/publications/item/2016-03-01/checklists-of-foreign-countries-subject-to-sanctions

REPORT: UK CONSTRUCTION INDUSTRY’S RESPONSE TO THE MODERN SLAVERY ACT

The Home Office on 9th October published a report from the Chartered Institute of Building on modern slavery within the building industry.  The types considered include –

  • “debt bondage” or bonded labour – a specific form of forced labour, in which the element of compulsion is through debt. It is characterised by a creditor-debtor relationship in which the worker is trapped by an unsustainably high debt to their employer; and
  • human trafficking – recruitment, transportation, transfer, harbouring or receipt of persons by means of the threat or use of force or other forms of coercion…to achieve the consent of a person having control over another person for the purpose of exploitation.

Its conclusions include that there is little doubt that UK construction supply chains are at risk of being infiltrated by criminal activities such as modern slavery.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/721325/MS_in_construction.pdf

NEW EU CUSTOMS ACTION PLAN TO PROTECT INTELLECTUAL PROPERTY ADOPTED BY THE COUNCIL

An EU news release on 9th October reported a new action plan will cover the years 2018 to 2022.  The EU Commission is invited to prepare a roadmap by Spring 2019 on the implementation of the new action plan, as well as to monitor this implementation and to submit annual reports to the Council.

http://data.consilium.europa.eu/doc/document/ST-12002-2018-REV-1/en/pdf

PHONE SCAMMERS CHEAT BELGIUM’S FOREIGN AFFAIRS OFFICE OUT OF €1.2 MILLION

The South China Morning Post on 9th October reported that part of the cash ended up in Hong Kong account.  An employee of the Federal Public Service Foreign Affairs was duped into thinking a contractor that had been carrying out construction work for the office had called her.  The employee, then deposited €1.18 million into what she thought was a new bank account for the contractor.

https://www.scmp.com/news/hong-kong/law-and-crime/article/2167717/phone-scammers-cheat-belgiums-foreign-affairs-office

UK GOVERNMENT LAUNCHES COUNTER-FRAUD PROFESSION

Civil Service World on 8th October reported that the Cabinet Office has launched a new counter fraud profession which is bringing together 10,000 specialists from across government.  The intention is to deliver standards, guidance and tools to help tackle online and offline fraud in the public sector, and provide formal recognition of counter fraud experts in government and raise the profile of the work they do.

https://www.civilserviceworld.com/articles/news/government-launches-counter-fraud-profession

https://www.accountancydaily.co/governments-counter-fraud-profession-goes-live

NEARLY 400 TONNES OF FAKE MEDICINES HAVE BEEN SEIZED OVER 2 YEARS IN IVORY COAST

The Daily Mail on 9th October reported that the main city Abidjan is a West African haven for counterfeit drugs, the health ministry has said.  Counterfeit medicine is the scourge of Africa and the cause of around 100,000 deaths annually on the world’s poorest continent, according to WHO.  It is said that in Ivory Coast, 30% to 40% of medicines are bought off the streets.  The illicit sector has a turnover of at least 10% of the world pharmaceutical business, meaning that it earns tens of billions of dollars a year, the Switzerland-based World Economic Forum estimates, adding that the figure has nearly tripled in 5 years.

https://www.dailymail.co.uk/wires/afp/article-6256537/I-Coast-says-nearly-400-tonnes-fake-drugs-seized-two-years.html

FORMER GUATEMALA VICE-PRESIDENT SENTENCED IN CORRUPTION CASE

The Daily Mail on 9th October reported that former Vice-President Roxana Baldetti has been sentenced to more than 15 years in prison for involvement in a fraudulent state contract.

https://www.dailymail.co.uk/wires/ap/article-6256387/Former-Guatemala-vice-president-sentenced-corruption-case.html

MEN ARRESTED AND FUEL LAUNDERING PLANT SHUT

Commercial Motor on 9th October reported action by police and HMRC across mainland Britain and Northern Ireland, and a suspected fuel laundering plant was taken apart in south Armagh where 22,500 litres of fuel was seized, along with 3,100 litres of marked gas oil, 350 litres of kerosene, 12,700 litres of lubricant, 2 trucks, a caddy van and a forklift.

https://www.commercialmotor.com/news/compliance/men-arrested-and-fuel-laundering-plant-shut

FIRST UNEXPLAINED WEALTH ORDER CHALLENGE TREADS FAMILIAR GROUND FOR COMPLIANCE PROFESSIONALS

White & Case on 8th October published an article about the recent unsuccessful challenge to UWO in the UK, saying that the judgment covers a number of issues which are familiar to compliance professionals, such as whether a firm was a state-owned enterprise and an individual’s source of wealth.

https://www.jdsupra.com/legalnews/first-unexplained-wealth-order-62754/

HOW DO POLICE OFFICERS DISMANTLE SYNTHETIC DRUGS LABS?

Europol on 9th October reported on a training course on dismantling illicit synthetic drug laboratories held in Belgium.  The course was attended by 21 participants from 15 EU Member States and Colombia.

https://www.europol.europa.eu/newsroom/news/training-together-in-belgium-how-do-police-officers-dismantle-illicit-synthetic-drugs-labs

NATIONAL INTERESTS DELAY EAST AFRICA CUSTOMS UNION, EVEN AS TECHNOLOGY KICKS IN

The East African on 9th October carried an article saying that 14 years after the East African Community’s Customs Union became operational, the Community has continually postponed the date of its full implementation.  The article says that the region was expected to achieve full implementation of the Customs Union in 2010, but that currently Customs Union implementation benefits politically-connected traders importing goods into the EAC and a larger number in India and China.  The community has also failed to come up with a deal on internal taxes like VAT, excise duties and income taxes.  Even though the Common External Tariff had been fully achieved, partner states are now choosing to go it alone because of slow implementation at the regional level – such as with Uganda and Kenya, which have gone ahead and implemented the 35% external tariff on steel products to protect their industries.

http://www.theeastafrican.co.ke/business/National-interests-delay-Customs-Union/2560-4797928-489yg1z/index.html

UK AND CAYMAN OFFICIALS HAD REACHED AN AGREEMENT ABOUT THE SHARING OF BENEFICIAL OWNERSHIP INFORMATION

Baker McKenzie on 9th October reported that the 2 governments have released a statement confirming that British and Cayman officials had reached an agreement about the sharing of beneficial ownership information that will provide for “close and effective” co-operation.  The agreement does not affect the threat that the UK may impose public beneficial ownership registers in the overseas territories through an order in council, if they have not been implemented by 2020.  The Cayman Compass reminds one that last month a director of the NCA criticised a lack of co-operation from the Cayman Islands – the FCO blaming problems on Cayman’s withdrawal from the so-called exchange of notes between the countries, which provides for the delivery of beneficial ownership information in response to British law enforcement requests within 24 hours and in urgent cases within 1 hour.

http://www.riskandcompliancehub.com/cayman-uk-resume-crime-fighting-cooperation/

https://www.caymancompass.com/2018/10/08/cayman-uk-resume-crime-fighting-cooperation/

BREXIT TOOLKIT FOR TRADERS

Customs software provider AEB has responded to the letter sent by HMRC to businesses that deal only with EU countries by producing a free downloadable “UK Customs Guide for Traders” that offers a step-by-step guide to getting started with customs clearance in the UK.  It contains the 6 steps to get started, from obtaining an EORI number from HMRC to storing data data relevant for importing and exporting – such as commodity codes, EORI number, Incoterms – correctly and up to date in your company’s systems from the beginning, tells you how to get access to HMRC systems and how to register for CHIEF or CDS.

https://www.aeb.com/intl-en/tool-kit/brexit/uk-customs-guide.phphains

BRANDS AND MARITIME OPERATORS PROPOSE BEST PRACTICES FOR TACKLING COUNTERFEIT GOODS IN MARITIME SUPPLY CHAINS

On 26th September, the International Chamber of Commerce reported that a new “Know Your Customer, Due Diligence and Maritime Supply Chain Integrity” Best Practices Paper launched at Global Intellectual Property Crime Conference in Dubai.  Representatives from major global brands and maritime companies have developed a set of best practices for the maritime industry to reduce the volume of counterfeits shipped around the globe through checks on their customers and supply chains.

https://iccwbo.org/publication/know-your-customer-due-diligence-and-maritime-supply-chain-integrity/

DELTA AIRLINES AND CATHAY PACIFIC VIE TO INTRODUCE END-TO-END TRACKING FOR CUSTOMERS

On 8th October, Loadstar reported that airfreight customers will soon be able to track shipments from warehouse to destination using bluetooth technology, with bluetooth in unit load devices (ULD).  US airline, Delta, has said its real-time tracking could now be extended beyond the airport into customer facilities, and would be ready to launch in January.  The article says that not only will the technology help track cargo, but it will also eliminate all paperwork at the dock door when ULD are loaned out.  A digital uniform control receipt will be emailed directly to the shipper and customers will receive customised push notifications, with full tracking available.  Since March, Delta has deployed bluetooth tracking technology at 80 airline warehouse locations.  Cathay Pacific is also close to delivering end-to-end visibility in its cargo shipments following successful trials of bluetooth tracking with ULD partner Unilode.

https://theloadstar.co.uk/delta-cathay-race-offer-end-end-tracking-air-cargo-customers/

JET-SETTING COUPLE TO REPAY £350,000 FROM VAT, NI AND TAX FRAUD

On 9th October, Accountancy Daily reported that a Liverpool couple who ran a pub and a car repair garage were jailed for 7 years over their failure to pay any VAT, NI or income tax on the businesses they ran, while also fraudulently claiming benefits.  They have been ordered to repay £355,000 or face more time behind bars.  HMRC investigators discovered that the pair had enjoyed extravagant trips and spent £24,000 on a new kitchen.  A search of their home uncovered a wealth of jewellery, including Rolex watches and Royal Mint gold sovereign coins, as well as bundles of cash totalling almost £40,000 stashed in handbags.

https://www.accountancydaily.co/jet-setting-tax-fraud-couple-repay-ps350k

THE FUTURE OF THE ISLAMIC STATE IN EAST AFRICA

On 6th October, Homeland Security Today in the US published an article which opened by saying that the slogan of the Islamic State (IS) is “remaining and expanding” (baqiya watatamadad), and at the end of July 2018, the Islamic State in East Africa could claim to be doing both.  It says that the Islamic State in Somalia (ISS) had survived an onslaught by its far more powerful rival, al Shabaab, and had established a secure base in Puntland and is challenging the dominance of al Shabaab.  Al Shabaab remains far stronger, and ISS will suffer if al Shabaab begins to see it as a greater challenge to its dominance.

https://www.hstoday.us/subject-matter-areas/terrorism-study/the-future-of-the-islamic-state-in-east-africa/

THE SECOND RESURGENCE OF ISIS IN SYRIA AND IRAQ

On 3rd October, Homeland Security Today in the US published an article and map and said that Islamic State of Iraq and al Sham (ISIS) is reconstituting a capable insurgent force in Iraq and Syria, retains nearly 30,000 fighters across Iraq and Syria and is “more capable” than Al-Qaeda in Iraq – ISIS’s predecessor – at its peak in 2006–2007.  It warns that ISIS could regain sufficient strength to mount a renewed insurgency that once again threatens to overmatch local security forces in both Iraq and Syria.  It says that ISIS is finding new sources of revenue was able to smuggle as much as $400 million out of Iraq and reinvest it into legitimate businesses across the wider Middle East.  It also continues to engage in lucrative criminal activity including extortion, smuggling, theft, and money laundering; and is engaged in efforts to generate additional revenue.

https://www.hstoday.us/subject-matter-areas/terrorism-study/map-the-second-resurgence-of-isis-in-syria-and-iraq/

Featured

IRAN IS NEW TRANSIT POINT FOR SOMALI CHARCOAL IN ILLICIT TRADE TAXED BY AL SHABAAB, SAYS UN REPORT

Reuters reported on 9th October that a UN report claims that criminal networks are using Iran as a transit point for illicit Somali charcoal exports that earns al Qaeda-affiliated al Shabaab millions of dollars annually in tax.  The movements employ fake country of origin certificates from Comoros, Ivory Coast and Ghana and the charcoal is relabelled as a product of Iran and exported on small boats to the UAE.  The report is said to say that Iran has been used after the former transit point, Oman, tightened its customs procedures.  The report estimated the wholesale value of illicit Somali charcoal to be $150 million a year in the UAE, and that about 3 million bags of charcoal were exported from Somalia in the past year.  The UN banned charcoal exports from Somalia in 2012 in a bid to cut off funds for al Shabaab.

https://af.reuters.com/article/topNews/idAFKCN1MJ1OE-OZATP?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FAFRICATopNews+%28News+%2F+AFRICA+%2F+Top+News%29&&rpc=401