UN ALLOWS RUSSIA EXEMPTION FOR ARMS SALES TO CENTRAL AFRICAN REPUBLIC
World Politics Review reports on 10th January that, in mid-December, the UN granted Russia an exemption to the arms embargo on the Central African Republic, after a petition from Moscow to supply the country’s embattled military with light arms and ammunition, according to reporting by the AFP.
RUSSIA’S ARMS EXPORTS TO AFRICA
In the same article as above, in an interview with Paul Stronski, a senior fellow in the Russia and Eurasia program at the Carnegie Endowment for International Peace, discusses Russia’s arms trade with Africa, the proliferation of small arms and light weapons, and how arms sales fit into Russia’s broader approach to the continent are discussed. The second-largest arms exporter in the world after the US, Russia already sells billions of dollars in weapons annually across Africa. The article reveals that 12% of Russian arms exports went to Africa in 2016, but that Russia is by far the largest arms supplier to Africa, with 35% of the continent’s arms imports coming from Russian suppliers — mostly from Rosoboronexport, a state intermediary with exclusive rights to export the full range of permitted arms for sale.
ALLEGED USE OF “KAMIKAZE” ISRAELI DRONE IN AZERBAIJAN
Haaretz in Israel reports that in August 2017 the Defense Ministry there put out an unusual announcement saying that it would be suspending the sale and export licence issued to Aeronautics Defense Systems for the Orbiter 1K drone that the company was producing for a “substantial client”. That same month, it was reported that the Ministry had opened an investigation following a complaint that in demonstrating a “kamikaze” drone in Azerbaijan, Israeli representatives of the company were allegedly asked to deploy the drone, armed with explosives, against a manned Armenian army position. The two individuals operating the drone refused the request; ultimately, more senior company officials took control of the aircraft, which missed its target, the complaint states. The company denied the claim at the time and said that any operational use of the aircraft was only carried out by the buyer of the drone. The newspaper reports that, nevertheless, the company is one of those sending representatives with the Prime Minister on a visit to India.
SOUTH KOREA POLICE RAID CRYPTOCURRENCY EXCHANGES
Quartz reports that authorities have raided some of South Korea’s biggest cryptocurrency exchanges. Coinone and Bithumb, 2 large exchanges for virtual currencies like bitcoin, ether, and litecoin, were raided by police and tax authorities. A Coinone official said that the exchange has been under scrutiny since last year by local police who “think what we do is gambling”. Such exchanges have sprung up rapidly in the past year or so in South Korea, servicing all kinds of people, everyone from college students to grandparents, with South Korea apparently accounting for some 20% of global bitcoin transactions.
US FEDERAL CRACKDOWN ON POT CAUGHT FINCEN ON HOP
On 11TH January Reuters reported that when the US DoJ said it was reversing policy on the $7 billion marijuana business, it failed to first notify federal officials who advise banks in states where the drug is legal, sources in the Congress said, uncertainty led to a flood of phone calls to FinCEN, which had no answers. The article reports that while marijuana is banned by federal law but it has become legal in one form or another in a number of states, and about 400 banks and credit unions do business with the U.S. marijuana industry – with most being small institutions with operations limited to states where marijuana has been legalised.
NEW AML RESTRICTIONS FOR BRITISH COLUMBIA CASINOS
The Globe & Mail in Canada on 11th January reported on new restrictions aimed at money laundering in British Columbia casinos, following reports of widespread use of them and almost 2 years after similar recommendations were rejected by the BC Lottery Corporation. The changes, brought in to disrupt the flow of suspicious transactions, had first been proposed in 2015 by regulators, and the province’s gambling and enforcement branch renewed calls for a clampdown the following year, documents show.
US SANCTIONS COMPLICATE IRANIAN TANKER CLAIMS
On 11th January Reuters reported that a reluctance of foreign banks to deal with Iran could complicate any compensation payments resulting from the collision of an Iranian oil tanker and a Chinese cargo ship, sources say. Liability has yet to be established but lawyers and insurers say wherever the fault lies compensation payments risk getting bogged down or even blocked because the tanker, Sanchi, and most of its crew were from Iran, and the ship was being operated by NITC of Iran and the continuing restrictions imposed by the US.
UK CHARITY DISQUALIFICATION RULES FOR TRUSTEES & MANAGERS TO CHANGE
On 10TH January CCH Daily reported on changes meaning to, from 1st August, the automatic disqualification rules for trustees and senior managers mean there will be more restrictions on who can run a charity in the UK in a bid to tighten governance, with the current automatic disqualification rules which only apply to trustees strengthened with new disqualification reasons and an extension of the scope of the rules. Detailed guidance is due at the end of January.
BREAKING NEW GROUND IN FRAUD RECOVERY CLAIMS
A briefing from law chambers 20 Essex Street concerns a series of public hearings in London in November and December, when the Commercial Court confirmed a suite of earlier interim orders to assist a global commodities company to trace and secure money that had been stolen from its bank accounts following a sophisticated payments fraud by unknown “ghost” perpetrators. The hearings involved what is believed to be the first worldwide freezing order being initially granted against a specified class of “Person(s) Unknown” on the basis that the class could nevertheless be defined with sufficient precision and that it was known where the perpetrators had channelled the money. There was also a disclosure order against 35 international banks to or through which the proceeds of the fraud have been diverted, to assist with the tracing and securing of the misappropriated money and with the identification of the ghost fraudsters. There were also what are described as “groundbreaking” orders for service of documents by alternative methods including by means of Facebook against 2 of the alleged fraudsters for whom it was difficult to find reliable contact details, and on the alleged fraudsters and the banks by a combination of email notification and online data room document delivery.
THE DEFINITION OF ‘MERCHANT’ IN THE ERA OF BLOCKCHAIN TECHNOLOGY
A briefing from law firm Montgomery McCracken and concerned with maritime and shipping law discusses what the oft-used, and often widely interpreted, term “merchant” can mean in respect of shipping and cargo claims. It refers to a recent case, Mediterranean Shipping Co, SA v. Best Tire Recycling Inc, and asks what is the implications of the continued application of the definition of “Merchant” in the modern day shipping industry?
IRS CAN BEGIN REVOKING US PASSPORTS OF DELINQUENT TAXPAYERS
On 21st December US law firm Cole Schotz reported that w.e.f. January 1st, the IRS will begin implementing section 7345 of the Internal Revenue Code to certify tax debt to the State Department. This will allow the State Department to revoke or withhold the issuance of passports to delinquent US taxpayers. After reviewing the criteria, the briefing concludes that a US citizen may be at risk of having their US passport revoked if they travel outside of the US without first addressing delinquent tax debts exceeding $50,000 through any administrative remedies and/or collection alternatives available.
EU REMOVES 1 NAME FROM GUINEA-BISSAU SANCTIONS LIST
On 11th January, EU Regulation 2018/31/EU removed Sanha CLUSSÉ from the EU Guinea-Bissau sanctions list. Council Decision 2018/36/CFSP also refers.
HM Treasury also issued a public notice advising of the change to UK sanctions lists on 11th January.
10 PAKISTANIS ARRESTED BY KENYA POLICE
ANI News reports that Kenyan police have arrested 10 Pakistanis after raids for their alleged involvement in terrorism funding, money laundering and drug trafficking. Among those seized is the father of a terror suspect arrested in Pakistan. He was identified as Mohammed Tasleem. The 50-year-old owns company that imports rice from Pakistan.
ECB CURRENTLY ASSESSING LEAKED FIAU REPORTS ON PILATUS BANK
Malta Today reports that the European Central Bank is assessing information and leaked documents on alleged money laundering by Pilatus Bank supposedly from the country’s FIU, according to a Nationalist MEP. Pilatus bank is chaired by Iranian-born Seyed Ali Sadr Hasheminejad, who holds a St Kitts & Nevis passport. The bank has denied links to the Malta PM’s family.
CALL FOR SUBMISSIONS ON UK TRADE BILL
The House of Commons Public Bill Committee is calling for written comments on the UK Trade Bill, if the contributor has relevant expertise and experience or a special interest in the Trade Bill, which is currently passing through Parliament. The first hearing is scheduled for 16th January, and written submissions may be accepted up to 30th January. The Trade Bill aims to make provision about the implementation of international trade agreements; make provision establishing the Trade Remedies Authority and conferring functions on it; and make provision about the collection and disclosure of information relating to trade.
IRELAND TO HAVE INDEPENDENT GAMBLING REGULATOR?
Calvin Ayre reports that Ireland’s gambling industry will be overseen by an independent regulatory body, assuming a new government proposal can meet with legislative approval. In a further to the 2013 Bill, not yet in force, a Minister is proposing an independent statutory authority be established to oversee all gambling and betting activity in the Republic.
COST OF UK FOBT CLAMPDOWN OVERSTATED?
Intergame reports on 11th January that the cost of a clampdown on fixed-odds betting terminals in the UK is being exaggerated, new independent research suggests. Analysis from the Centre for Economics and Business Research, commissioned by BACTA, the trade association representing the UK amusements sector, shows that the economic impact on bookmakers of lower FOBT stakes could be significantly less than existing estimates have suggested. Perhaps up to 47% lower than suggested by the government’s initial impact assessment, with a £335 million reduction in annual gross gambling yield to high street betting shops, against the government’s estimate of £639 million.
JAPAN OUT ON A LIMB IN IVORY TRADE; SMUGGLING TO CHINA IS RIFE
On 10TH January the Asahi Shimbun in Japan carried an article which said that although Japan boasts a domestic trade in ivory that it claims is completely above board, it cannot evade calls to shut down the thriving activity on grounds it encourages illegal poaching driven by high demand in China. Global NGO and other interested parties say Japan should do more to crack down on smuggling. According to experts, ivory smuggling from Japan to China is rampant, although authorities here rarely make an arrest. The article relates information from TRAFFIC, a British-based international NGO which said in a report in December that there were 113 cases of illegal ivory exports from Japan to China between 2011 and 2016, involving seizures totalling about 2.3 tons. Seizures by authorities in China accounted for 106 of the cases, the report said.
2017 FCPA YEAR IN REVIEW
In the latest TRACE podcast, Billy Jacobson describes the key FCPA enforcement actions of 2017, what surprised him last year and his assessment of enforcement under President Trump.
CYBERSECURITY OF NUCLEAR WEAPONS SYSTEMS: THREATS, VULNERABILITIES AND CONSEQUENCES
Another cheery article from Chatham House that says that at times of heightened tension, cyberattacks on nuclear weapons systems could cause an escalation, which results in their use. It points out that nuclear weapons systems were first developed at a time when computer capabilities were in their infancy and little consideration was given to potential malicious cyber vulnerabilities. It says that it is the responsibility of nuclear weapons states to incorporate cyber risk reduction measures in nuclear command, control and communication systems. Although some information is publicly available on US weapons systems, there is very little information regarding other nuclear weapons states. Academia and civil society, it contends, should be encouraged to bring this issue to the attention of their government.
THE ZARRAB AFFAIR DRIVES WEDGE BETWEEN TURKEY AND US
The European Council on Foreign Relations has published an article saying that the saga of an Iranian gold trader has driven a wedge between Turkey and its allies. In the Zarrab case, an Iranian gold-trader who married a Turkish pop-star in 2010 and rapidly climbed his way up Turkey’s power ladder (with several yachts, flashy homes and a fondness for celebrity status) and made important friends. In December 2013 he found himself at the center of a massive corruption investigation in Turkey involving illegal gold transfers and fake exports that had siphoned billions of dollars to Iran, circumventing international sanctions. Several sitting ministers were accused of accepting bribes from Zarrab, and the scheme allegedly centered on the state-owned Halkbank. However, the Turkish government, seeing the investigation as a Gülen-linked attempt to bring down the Erdogan government, swiftly buried the case and arrested those who brought up the charges. But an FBI inquiry was also quietly underway, and Zarrab was arrested in March 2016 when he landed in Miami to visit Disneyland with his family. He seems to have accepted a plea bargain deal in the US.
LUX LEAKS WHISTLEBLOWER WINS APPEAL
The Parliament magazine on 11th January reports that Luxembourg’s highest court overturned the sentence against the Lux Leaks whistleblower who was convicted of leaking thousands of documents that revealed tax breaks for multinational firms. His case will now go to appeal.
PWC “FACES INDIAN BAN”
Sputnik of Russia reports that India’s market regulator, the Securities and Exchange Board of India (SEBI), has imposed a 2-year ban on global accountancy firm Price Waterhouse (PwC) from auditing listed companies in the country after it failed to check irregularities in a $1.7 billion auditing fraud at the defunct Satyam Computer Services.
HMRC AEO GUIDANCE
On 11th January, HMRC reissued its guidance on Authorised Economic Operator status and how to apply for it. AEO status is an internationally recognised quality mark indicating that your role in the international supply chain is secure, and that your customs controls and procedures are efficient and compliant. HMRC explains that while it is not mandatory, but it gives quicker access to certain simplified customs procedures and in some cases the right to ‘fast-track’ your shipments through some customs and safety and security procedures. You can apply for AEO status for customs simplification (AEOC), AEO status for security and safety (AEOS) or both. It, or similar, exist in many other jurisdictions, and co-operation agreements recognising one another’s AEO programmes exist and will become more common.
RUSSIANS GAINING EU CITIZENSHIP THROUGH MALTA
EU Observer on 11th January reports on Russia’s business elite who are snapping up Maltese passports amid EU and US sanctions, and saying that those who forked out for Maltese and – by default – EU citizenship last year included Arkady Volozh, the founder of Yandex, a Russian Uber-type firm, and his entire family.
GREECE SEIZE SHIP CARRYING EMBARGOED EXPLOSIVES MATERIALS BOUND FOR LIBYA
Defence Web on 11th January reported that Greek authorities seized a Tanzanian-flagged ship sailing near Crete and heading for Libya carrying materials used to make explosives. Authorities found 29 containers carrying materials including ammonium nitrate, non-electric detonators and 11 empty LPG tanks. According to the ship’s bill of lading, the cargo was loaded in the Turkish ports of Mersin and Iskenderum and was destined for Djibouti and Oman. The captain was ordered by the vessel’s owner to sail to Misrata to unload and deliver the entire cargo.
ANGLO IRISH BANK CHIEF TRIAL DELAYED
On 11th January the Belfast Telegraph announced that the trial of former Anglo Irish Bank chief, David Drumm, has been postponed for 2 weeks to allow legal arguments.
UKRAINE PLANS TO TAKE CONTROL OF CRYPTOCURRENCY MARKETS
112 UA in Ukraine reports that the National Security and Defense Council has announced plans to take control over the cryptic currencies market in Ukraine, because of the “absence of domestic control over the cryptic currencies might result in laundering money and create opportunities for funding terrorism” – including the activity of Russian militants in Donbas. The National Coordination Centre for Cyber Security has instructed respective governmental agencies to create a working group to solve respective legal issues and the National Bank is also to consider the option to issue its own cryptic currency. Law enforcement agencies are to have access to databases of cryptic currency stock markets, while the customers will be obliged to store the information about all transactions and release the information about clients when requested by the respective services.
DERIPASKA SUING PAUL MANAFORT
UA Wire in Ukraine reports that a company owned by Russian billionaire Oleg Deripaska has filed a lawsuit in New York against Paul Manafort, former head of Trump’s electoral campaign, and his assistant Richard Gates. Deripaska’s Cyprus-based company Surf Horizon Limited accuses Manafort and Gates of fraud involving a portion of the $18.9 million which Surf invested in the Ukrainian telecommunications companies known as the Black Sea Cable Group.
US SETS UP HEZBOLLAH NARCO-TERRORISM TASK FORCE
On 11th January, the Times of Israel reported that the US DoJ had announced the creation of a special task force to investigate what it called “narco-terrorism” by the powerful Lebanese organisation Hezbollah.
SCOTTISH LIMITED PARTNERSHIPS EXAMINED
On 11th January STV reported that “dozens of Scottish firms using a business model linked to a $1 billion fraud have been probed by Police Scotland at the behest of overseas law enforcement agencies”. The force confirmed it had received 48 international requests to research Scottish Limited Partnerships (SLP) since 2016. The article notes that SLP with registered addresses in Scotland have been linked to a number of high-profile international corruption and money laundering cases in recent years. Another related article notes that SLP have been labelled the “UK’s homegrown secrecy vehicle” by campaigners Transparency International. This second article looks at the origins and growth in numbers of SLP.
EGYPTIAN COURT QUASHES CORRUPTION CONVICTION OF FORMER MINISTER
On 11th January Middle East Eye reported that an Egyptian court had quashed the conviction and prison sentence for alleged $100 million corruption against ex-interior minister Habib al-Adly and ordered a retrial. A criminal court had sentenced Adly, who served under former president Hosni Mubarak before his fall to a popular uprising in 2011, to 7 years in prison in April after convicting him on charges of abusing public funds.
SERBIAN MINISTER SUES OVER PARADISE PAPERS
OCCRP on 11th January reported that a Serbian minister – Nenad Popovic, a minister without portfolio – is suing OCCRP partner KRIK for revealing he owns offshore companies and assets worth $100 million. KRIK’s story is based on the Paradise Papers. Law firm Appleby had declared Popovic a high-risk person after having dug into his background, according to leaked email exchanges between staff members. He has been a legal resident and taxpayer in Switzerland since 2008 and the leaked documents show that he controls offshore companies registered in Cyprus and the BVI, companies in Russia, and property in at least 3 countries.
FACEBOOK PHOTO OF TATTOOED OLD MAN LEADS TO YAKUZA BOSS ARREST
OCCRP also reports that after a Thai published on Facebook a photo of the torso of a fully-inked old man playing board games with other retirees on the side of the road a former Yakuza boss has been arrested. The photo went viral and Japanese authorities recognized 74 year-old Yakuza boss Shineharu Shirai by his tattoos and his missing little finger, a common self-inflicted punishment among the Yakuza.
BELARUS DIGITAL CURRENCY DECREE
Jurist reports that on December 21st, the President of Belarus signed Decree No. 8, “On the Development of the Digital Economy”, aimed at the development of the digital economy in Belarus by regulating blockchain, cryptocurrencies, tokens, mining, smart contracts, and defining the legal status of such new subjects as crypto-platform operators and cryptocurrency exchange operators. The rules of the Decree are said to be unique, and is in some ways more advanced than even the most highly developed jurisdictions.
FREEZING ORDERS: A LITIGATOR’S NUCLEAR WEAPON
On 10th January law firm Walker Morris provided a briefing comprising a guide to freezing orders, described as “the litigator’s nuclear weapon”. The briefing following, the firm says, the strict obligations facing a freezing order applicant having hit the legal headlines in several recent cases.
MAN ARRESTED FOR ALLEGED INVOLVEMENT IN GADDAFI-SARKOZY CASE GIVEN BAIL IN UK
On 11th January the Guardian reported that a French businessman wanted for questioning in relation to an inquiry into the alleged illegal financing of Nicolas Sarkozy’s 2007 presidential election provided by the late Libyan dictator Gaddafi has been granted £1 million bail by the high court in London. France is looking to extradite Alexandre Djouhri, who is resident in Switzerland, and who was arrested on 7th January by the Metropolitan police at Heathrow airport on a European arrest warrant issued by the French in December.
TEXAS MAYOR ARRESTED IN HEALTH CARE FRAUD AND LAUNDERING CASE
Risk & Compliance Hub reports that 4 individuals, including the mayor of Rio Bravo [wasn’t that a John Wayne movie?] in Texas – who was a licensed physician and medical director – have been charged by federal prosecutors for their alleged roles in a $150 million health care fraud and money laundering scheme. Francisco Pena was accused of taking kickbacks to refer patients for services for which they did not qualify. He is alleged to have conspired with 3 owners of a health care company, Merida Health Care Group, according to officials.
ESTONIAN UNMANNED GROUND VEHICLE (UGV)
After unmanned air vehicles (UAV or drones) and unmanned boats (as employed by Iran and Houthis, it seems), comes unmanned ground vehicles (or UGV). On 11th January, Janes.com reported that Estonia’s Milrem Robotics has demonstrated the autonomous operation of its THeMIS UGV during a live-fire event held at the Kolgu range in December 2017.
See also –
FRANCE LOOKS TO USE BLOCKCHAIN FOR UNLISTED SECURITIES
On 11th January, Clifford Chance carried a briefing saying that France endeavours to take the lead in financial innovation by becoming the first country to introduce a legal framework for the use of blockchain technology for the transmission and representation of unlisted securities.