US NAVY ELECTROMAGNETIC RAIL GUNS IN TROUBLE?
On 2nd January Defence Web carried an article claiming that there were problems in the US Navy’s programme to develop an electromagnetic railgun (EMRG). This would use magnetic fields to accelerate a projectile instead of chemical propellant, which promised to be capable of launching projectiles at speeds of up to 5,600 mph or Mach 7 to targets up to 100 nm away. Alongside laser weapons, this was intended to improve the self-defence capability of its warships against missile attacks and UAV. The article reports that the prototypes of the weapons (by General Electric and BAE Systems) he weapons were reported by the Navy on July 2017 to be expected to “reach a capacity of 10 rounds per minute with a 32 Mega-Joule muzzle launch for each round” by 2019. It had planned in 2015 to be able to fit an operational gun on a ship by 2025. However, the article then reports that comprehensive research published on 4th December by veterans’ news website Task & Purpose revealed the next-generation weapon programme was threatened by a lack of funding and changing priorities. The article goes on to comment on research being carried out by other countries, including China and Russia, Turkey and a Franco-German development.
RABOBANK IN US MAKES PROVISION FOR PENALTIES FOR AML FAILINGS
The Wall Street Journal reports that the California-based unit of Dutch lender Rabobank Groep set aside €310 million in anticipation of a settlement, which would likely include a guilty plea, connected to money-laundering compliance problems. In a statement, Rabobank said its US unit has been under investigation by the DoJand other US authorities since 2013.
KENYA CENTRAL BANK CALLS FOR IMPROVED AML/CFT CONTROLS
Standard Media in Kenya reports that the Central Bank of Kenya (CBK) has directed all banks to conduct a risk assessment exercise to determine their AML/CFT preparedness, and to put in place a suitable risk assessment framework, appoint an MLRO, and provide CBK with the results of their assessments by the end of 2018.
MARTINELLI HEARING DELAYED
Kenneth Rijock reports that the US District Judge assigned to Ricardo Martinelli’s Habeus Corpus petition, to avoid extradition to Panama, has ordered that the hearing on the petition be rescheduled to January 16th.
A CHEERY BIT OF MEMORABILIA FROM THE US IN THE 50s
SENTENCES FOR REMOVING ASSETS FROM COLLAPSED GERMAN DRUGSTORE CHAIN
Herbert Smith Freehills reports that the founding family behind German drugstore chain Schlecker, whose 2,800 stores closed in 2012, were sentenced over the company’s collapse by a German court. 73-year-old former billionaire Anton Schlecker, received a suspended prison term of 2 years and a £48,280.61 fine for intentional bankruptcy. Under German law, removing assets from a company that faces imminent bankruptcy is illegal and can result in a prison term of up to 10 years. His son and daughter also received sentences for related offences.
ETH Zurich has published a collection of essays focusing on 11 scenarios that may appear unlikely today, but which could come to pass in the near future. It says that the primary aim of each text is to highlight the EU’s current strengths and weaknesses, specifically in its decision-making processes and crisis management structures. The potential crises are –
- a repeat intervention by Russia in Ukraine;
- the disintegration of Bosnia-Herzegovina;
- the so-called Islamic State taking over an enfeebled African state;
- the toppling of Cameroon’s government;
- Japan acquiring nuclear weapons;
- India and Pakistan stumbling into another armed conflict;
- A Da’esh attack on a Mediterranean cruise liner;
- Israel and Hezbollah fight again;
- Europe is struck by right-wing terrorism;
- US misreads Turkey; and
- North Korea invades South Korea in cyberspace.
PRIORITY RISKS FOR THE US IN 2018
Another article from ETH Zurich, originally published by the Council on Foreign Relations in the US, is the Center for Preventive Action’s annual Preventive Priorities Survey (PPS) evaluates ongoing and potential conflicts based on their likelihood of occurring in the coming year and their impact on US interests. The PPS aims to help the US policymaking community prioritise competing conflict prevention and crisis mitigation demands. It says that there are 8 top priority contingencies the US should pay particular attention to as 2018 gets underway, including –
- a possible conflict between Iran and the US;
- a potential armed confrontation over the disputed territories in the South China Sea; and
- a highly disruptive cyberattack against US critical infrastructure.
BULGARIAN PRESIDENT VETOES CORRUPTION BILL
Even as Bulgaria assumes the presidency of the EU, Jurist reports that the Bulgarian President on 2nd January vetoed an anti-corruption measure adopted in December by the national assembly. The Law for Countering Corruption and Forfeiture of the Unlawfully Acquired Property, would have created a single commission charged with investigating high government officials for graft and conflicts of interest. But the President said “does not provide an adequate legal basis for dealing with corruption” and “will make it even more difficult to fight it”. He nevertheless said he remained committed to fighting corruption.
30th ANNIVERSARY OF THE HS
On 3rd January the World Customs Organisation marked the 30th anniversary of the Harmonised System used to identify goods for customs purposes.
EUROPEAN ANTI-TERRORISM PACKAGE PRIORITIZES CBRN PREPAREDNESS, EXPERT SAYS
Homeland Preparedness in the US carried an article on 2nd January about the European Commission’s Action Plan to enhance preparedness against CBRN security risks is part of its anti-terrorism package released in October 2017. The expert was Steven Neville Chatfield, an independent consultant in biopharmaceuticals and a director for the Centre for Emergency Preparedness and Response in the UK Health Protection Agency. He says that experiencing an escalating threat level of chemical, biological, radiological and nuclear (CBRN) attacks across its region, the Commission’s related preparedness plan is extremely important, and that “I would describe the threat level in Europe as being high and evolving”. The action plan says that attacks involving, for instance, “a radioactive dispersal device or an anthrax attack using unmanned aerial systems,” could be extremely high, and directly says that member states have an obligation to provide medical countermeasures. Chatfield notes that action plan says –
- There are credible indications suggesting terrorist groups might have the intention of acquiring CBRN materials or weapons and they are developing the knowledge and capacity to use them;
- Member states should increase preparedness for cross-border threats to health via joint purchases of medical countermeasures; and
- Member states and the Commission should develop a shared vision at the EU level on how to improve vaccine coverage in the EU and then take actions to strengthen vaccine supplies and stock management, and should increase the effectiveness of vaccine research and development.
IS MEKONG RIVER SET TO BECOME THE NEW SOUTH CHINA SEA FOR REGIONAL DISPUTES?
The South China Morning Post carried an article on 2nd January speculating that access to, and use of, the river that affects 6 SE Asian countries (China has built several dams and hydro-electric facilities, which may have contributed to the 2016 drought in Vietnam, for example).
GIBRALTAR FIRST TO REGULATE DISTRIBUTED LEDGER TECHNOLOGY
Gibraltar Chronicle reports that Gibraltar becomes the first jurisdiction in the world to offer a regulatory framework for distributed ledger technology (DLT), paving the way for the its drive in a booming new area of business. The DLT regulatory framework came into effect on January 1st and means that Gibraltar-based firms using blockchain to store or transmit value belonging to others must now apply for a licence from the GFSC.
RUSSIAN-SPEAKING FOREIGN FIGHTERS IN IRAQ AND SYRIA
On 29th December the Center for International and Strategic Studies published a report on the phenomena that saw Russia and the countries of post-Soviet Central Asia providing more of their citizens and residents who travelled to Syria and Iraq as foreign fighters than have any other parts of the world. It says that, although numbers vary from source to source, roughly 8,500 individuals from 6 countries (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, and Afghanistan) have travelled to join a host of Salafi-jihadi factions — most predominantly ISIS. It says that foreign fighters from the North Caucasus have played an outsized role on the battlefield in Iraq and Syria, serving in leadership positions for both ISIS and Al-Qaida. It reports that approximately 900 are said to have returned home – but many others may seek refuge in the large Russian-speaking diaspora in Turkey’s Istanbul, Ukraine, and across Europe and some are also finding themselves in Egypt, among other destinations.
UN SECURITY COUNCIL TO FOCUS ON NON-PROLIFERATION, AFGHANISTAN, MIDEAST IN JANUARY, AND RENEW CAR SANCTIONS
The Global Times reports that the Kazakh president of the UN Security Council for January said that the Council will focus attention on 3 areas, namely non-proliferation of WMD, Afghanistan and Central Asia, and the Middle East. The Council is also expected to adopt a resolution renewing sanctions in the Central African Republic (CAR) and the mandate of the Panel of Experts assisting the 2127 CAR Sanctions Committee.
RIGHT-WING EXTREMIST ARRESTS IN UK
5 men and a woman have been arrested in the UK on suspicion of terrorism offences and being members of the banned far-right group National Action. West Midlands Counter Terrorism Unit carried out the arrests with the help of other counter-terrorism units across the UK. National Action was made a proscribed terrorist organisation in December 2016, becoming the first extreme right-wing group to be outlawed in the UK, and is described as a “racist neo-Nazi group” that was established in 2013 and has branches across the UK which “conduct provocative street demonstrations and stunts aimed at intimidating local communities”.
NEW EU DIRECTIVE REQUIRING ACCESS TO BENEFICIAL OWNERSHIP INFORMATION BY TAX AUTHORITIES
On 3rd January, the European Commission welcomed the entry into force of new rules obliging Member States to give tax authorities access to data collected under AML legislation. As of 1st January, national tax authorities will have direct access to information on the beneficial owners of companies, trusts and other entities, as well as customer due diligence records of companies. The new amended rules, enshrined in the Directive 2011/16/EU on administrative co-operation in taxation, is intended to give tax authorities much-needed access and enable them to react quickly and efficiently to cases of tax evasion and avoidance.
FATF REPORT ON AML/CFT IN MEXICO
On 3rd January FATF published the report on the mutual evaluation of the AML/CFT systems of Mexico, carried out by IMF using FATF requirements and recommendations. The accompanying news release said that Mexico has a good system to tackle money laundering and terrorist financing, but should step up efforts in pursuing launderers and confiscating their assets to mitigate the significant risks, acknowledging that Mexico faces a significant risk of money laundering, stemming principally from activities most often associated with organised crime, such as drug trafficking, extortion, corruption and tax evasion. It notes that oversight of designated non-financial businesses and professions is not very developed and significantly under-resourced and there is a low level of suspicious transaction reporting. Also, despite the fact that Mexican authorities recently conducted some high-profile investigations, they are not investigating and prosecuting money laundering in a proactive and systematic fashion, but rather on a reactive, case-by-case basis, and does not systematically pursue confiscation of proceeds and instrumentalities as a policy objective, and not commensurate with the money laundering and terrorist financing risks. It also notes that a serious concern across all sectors is that beneficial owners are being identified only to a limited extent, systematically weighing on entities’ effectiveness in assessing and managing money laundering and terrorist financing risks.
Reuters take on report: Mexico not doing enough to investigate, prosecute money laundering
U AND UKRAINE DISPUTE ON TIMBER EXPORTS AND THE RUSSIAN CONNECTION
Euromaidan in Ukraine reports that frequent floods in the Carpathian Mountains result from rapid deforestation, resulting in Ukraine imposing a moratorium on the export of round timer, but the EU insists this must be lifted, saying that the ban restricts free trade and does not help stop illegal deforestation. Meanwhile illegal deforestation and smuggling continues. The article points the finger at a pro-Russian, Viktor Medvedchuk, one of the first persons made subject to US sanctions following the Russian takeover of the Crimea.
PETROBAS TO SETTLE $3 BILLION CLAIM IN US
City AM reports that Brazil’s state-controlled oil company Petroleo Brasileiro, (aka Petrobas), has said it will pay nearly $3 billion to settle a US class action brought by investors who said a corruption scandal hit the value of their investments. Shareholders sued Petrobas, which did not admit any wrongdoing under the deal, after former executives were accused of accepting more than $2billion in bribes over a decade. The company has said it was a victim itself of the bribery operation operation, which eventually led to the impeachment and downfall of the country’s President. A US judge must still approve the settlement.
LUXEMBOURG FINES FOR PANAMA PAPERS CASES
On 3rd January, Tax News carried the story of the Luxembourg financial regulator, CSSF, fining several financial institutions for failing to adhere to AML laws following an investigation which began after the publication of the Panama Papers. CSSF announced in December that it issued fines totaling just over €2 million to 9 supervised entities, including 4 banks, for “medium or even severe breaches” of Luxembourg’s AML/CFT Laws. Several other firms received injunctions as a result of less severe breaches of the laws, but “immediately” brought themselves into compliance, the CSSF is quoted as saying.
SRI LANKA CENTRAL BANK ALLEGED FRAUD IN BOND ISSUE
On 3rd January, Colombo Page reported the Sri Lanka’s President had said that the Commission appointed to probe the Central Bank bond issue has recommended further investigations into the alleged fraud and corrupt practices at the Central Bank from 2008 onwards and take legal action based on the findings.
UK ADDS 4 NEW SHIPS TO ITS NORTH KOREA SANCTIONS LIST
On 3rd January, HM Treasury issued a news release advising that 4 ships had been added to the list of those subject to UN sanctions. Under the so-called linking regulations in the UK, this temporary designation lasts until 27th January (by which time it is expected that an EU Regulation will have replaced the designation). The 4 ships are –
- Billions No 18
- Rung Ra 2
- Rye Song Gang 1
- Ul Ji Bong 6
MASSIVE LAWSUIT OVER BAHAMAS DEVELOPMENT
Global Construction Review reports that the developer who started the $4.2 billion Baha Mar mega resort in the Bahamas has filed an extraordinary lawsuit against the Chinese contractor (i.e. state-owned China Construction America, known as CCA Construction Inc., a unit of the biggest contractor in the world, China State Construction Engineering Corp. (CSCEC), and related entities) that built it, alleging “massive fraud” and “malicious acts of deceit” that drove the developer to bankruptcy in 2015.
MALTA GAMING AUTHORITY REFUTES REPORTS OF MAFIA INFILTRATION
Calvin Ayre reports that the Malta Gaming Authority has hit back against local media reports that Italian organised crime groups had attempted to infiltrate Malta’s gaming industry. In December, the Times of Malta published an article detailing allegations that members of Palermo-based Mafia clans had developed “advanced plans” to shift their base of operations to Malta due to increased pressure by Italian anti-mafia police.
ARGENTINA COURT ORDERS OPERATORS OF UNAUTHORISED GAMBLING SITE NOT TO LEAVE COUNTRY
Calvin Ayre reports on 3rd January that an Argentine court has ordered the operators of a controversial online gambling site (Miljugadas) not to leave the country, using new laws that classify unauthorised online gambling as a federal crime.
CREDIT SUISSE SUES OVER $30 MILLION BUSINESS JET
Law 360 reported on 3rd January that Credit Suisse AG has filed a claim at the High Court in London against an aircraft services company, demanding that the firm hand over a private jet which the Swiss lender says it is owed after the aircraft’s owner, Challenger-Mondel Ltd., defaulted on a $30 million loan. The aircraft is believed to be Isle of Man-registered M-MICS.
BLOCKCHAIN IN THE FINANCIAL SERVICES SECTOR: WHAT’S ON THE UK REGULATOR’S AGENDA?
Osborne Clarke on 3rd January published a briefing reflecting on the Feedback Statement issued by the FCA following its Discussion Paper (DP 17/03) on distributed ledger technology (DLT). This Statement outlines the FCA’s assessment of the possible impact of, and its primary regulatory concerns with, the adoption of DLT in the financial services sector, and focuses on the following areas: operational risk; digital currencies; digital assets and smart contracts; initial coin offerings (ICO); regulatory reporting; financial crime; and the General Data Protection Regulation (GDPR). The key message in the Feedback Statement is that the FCA does not propose to make any regulatory changes in relation to DLT at this time, and will continue to monitor progress, adoption and impact of DLT in the market to assess if any such changes are required in the future.
TRACE PODCAST: THE BROOKLYN FIFA TRIAL
The latest TRACE podcast features a discussion with international sports expert, Declan Hill, who returns to the podcast to discuss the FIFA trial that concluded in the US in late December and the outlook for meaningful reform.
ECUADOR VICE-PRESIDENT STRIPPED OF HIS TITLE
Ecuador’s Vice President Jorge Glas is being stripped of that title because he has been absent for more than 3 months — locked up in prison on a 6-year sentence for corruption handed down in December as the highest-ranking Latin American politician to be convicted and imprisoned for his role in the Odebrecht, where the Brazilian construction group gave bribes to secure public works contracts.
1950s URANIUM ORE MILL STILL HAUNTING THE US
The Bulletin of Atomic Scientists on 3rd January published an article that started with these chilling words – “Beneath the murky green waters on the north end of Lake Powell, entombed within the tons of silt that have been carried down the Colorado River over the years, lies a 26,000 ton pile of un-remediated uranium mill tailings. It’s just one polonium-, bismuth-, thorium-, and radium-tainted reminder of the way the uranium industry, enabled by the federal government, ravaged the West and its people for decades”.
This material is the after-effect of a uranium ore mill that was operational 1949-53, and the article reflects on the subsequent and continuing effects.
MIT CONCERN OVER RANSOMWARE AND WEAPONISED AI THREATS TO CLOUD
Banking Technology reports on an article entitled “Six cyber threats to really worry about in 2018″ in the MIT Technology Review from the Massachusetts Institute of Technology that points to 2 specific cloud-based threats: ransomware targeting cloud providers and weaponised artificial intelligence (AI).
FIRST CRIMINAL CONVICTION IN IRELAND SECURED USING SIGNATURE DNA EVIDENCE ON STAINED BANKNOTES
Business Wire carries a news release from Applied DNA Science Inc that announced that SigNature® DNA evidence has helped to convict a member of an Irish organised crime group involved in a cash in transit (CiT) robbery. The robbery took place in February 2016 when a G4S cash-in-transit guard was approached by 2 criminals, one armed and the other having a knife. The criminals escaped with a stolen cash box in a car driven by Lee Harris, another member of the robbery team. Later that evening, Harris was stopped at a police checkpoint for driving erratically and was subsequently arrested for drunk driving. €2,850 in blue/green ink-stained bank notes were found on Lee Harris and the following day he was charged with armed robbery. Police contacted Applied DNA to request forensic examination of bank notes. Within a week, Applied DNA laboratories analysed samples and returned an expert witness report to police, forensically linking the stained bank notes to the specific cash box stolen during the armed robbery.
“CORRUPTION HAS TAKEN OVER ZAMBIA”, SAYS RESIGNING MINISTER
KYC 360 on 3rd January reported that minister of foreign affairs, Harry Kalaba, has resigned citing corruption, lack of shame, and greed in President Edgar Lungu’s government.
INTERACTIVE: THE MISSILE WAR IN YEMEN
The Missile Threat website maintained by the Center for Strategic and International Studies includes a webpage that records missile activity in and around Yemen. The page, last updated on 19th December, includes interactive maps of the region.