22nd January 2018
IN THE DRUGS AND ARMS TRADE, IS IRAN GETTING AWAY WITH MURDER?
In the Eurasia Review on 22nd January, this opinion piece discusses developments that, it says, increased Iran’s role in drugs and arms trafficking during the time of the Obama Administration. For example, its close relationship with Venezuela is said to have contributed to a five-fold increase in Venezuela’ cocaine production, mostly destined for the US, and the alleged use of the Venezuela national airline to transport cash, drugs and weapons. It also alleges that Iran used Lebanese and Syrian communities to cultivate crime in Latin America. It refers to Lebanese arms dealer Ali Fayad, who it says is today deeply involved in diverting a flood of Russian heavy weapons to Syria, Yemen, Afghanistan and the wider region. The Hezbollah, supported by Iran, is said to have made a “wholesale shift” into organised crime from 2006, particularly in the drugs trade. It says that Iran has reportedly “become deeply complicit in arms smuggling throughout Africa. Nigeria, Kenya, Sierra Leone, Senegal and other states are key proliferation hubs, with a broad range of African insurgent and terrorist groups benefiting from Iranian military munificence. Several West African states also became integral parts of Hezbollah’s cash-laundering network for billions of dollars of drugs money flooding out of the US”. It says that Sudan had been a key ally in facilitating Iranian arms smuggling towards conflicts until Gulf States lured it away. The article claims that, using the Lebanese diaspora, front companies and smuggling routes are then established and evangelical Shiite institutions are set up to cultivate local support and nurture proxy groups, and then these channels are then exploited for a variety of illicit purposes.
ARRESTS IN CALIFORNIA OVER ATTEMPT TO SEND HIGH-TECH COMPUTER CHIPS AND TECHNOLOGY TO CHINA
Pasadena News Now on 21st January reported that 2 people (Kiet Ahn Mai, 63, and Yi-Chi Shih, 62) were arrested on federal charges in California on charges of illegally obtaining technology and integrated circuits with military applications that were exported to a Chinese company without the required export licence. The case involves unauthorized access to a protected computer of a US company that manufactured specialised, high-speed computer chips known as monolithic microwave integrated circuits (MMIC), and the transfer the US company’s technology and products to the People’s Republic of China.
EX-IBM EMPLOYEE SENTENCED FOR STEALING SECRETS FOR CHINA
American Security Today reports that Xu Jiaqiang, 31, formerly of Beijing, has been sentenced to 5 years in prison, for economic espionage and theft of a trade secret in connection with Xu’s theft of proprietary source code from Xu’s former employer, with the intent to benefit the National Health and Family Planning Commission of the People’s Republic of China.
BITCOIN LAUNDERING: AN ANALYSIS OF ILLICIT FLOWS INTO DIGITAL CURRENCY SERVICES
This report from the Center on Sanctions and Illicit Finance, a right-wing think tank in the US, is that recently quoted as claiming that only 1% of cryptocurrency transactions were linked to illicit activities (though it also says that only 0.61% of the money entering conversion services during the 4 years analysed were verifiably from illicit sources), but claimed that online gambling sites are prime conduits for laundering ill-gotten Bitcoin cryptocurrency proceeds. The stated purpose of the study was to “identify where individuals turn in order to cash out or transmit bitcoins (BTC) acquired from illicit entities and to discover typologies for criminals “laundering” bitcoins”.
THE 270 PEOPLE CONNECTED TO THE US ELECTION/TRUMP INVESTIGATION
On 21st January a POLITICO analysis of court documents, congressional letters, public testimony and media reports was published that reveals that the investigations into the 2016 US election and its aftermath now involve hundreds of people in Washington, Moscow and around the world.
DISCONTINUANCE OF A BUSINESS RELATIONSHIP: IRISH CENTRAL BANK ADVICE
On 31st December, law firm Arthur Cox published a briefing on the December 2017 AML Bulletin from the Central Bank of Ireland. This covered the discontinuance of a business relationship for new and existing customers.
UNEXPLAINED WEALTH ORDERS
On 18th January, McGuire Woods published a briefing on Unexplained Wealth Orders (UWO) available under UK law under the amended Proceeds of Crime Act 2002.
OFFICE FOR PROFESSIONAL BODY ANTI-MONEY LAUNDERING SUPERVISION (OPBAS)
On 19th January, law firm Simmonds & Simmonds published a briefing on the introduction of OPBAS in the UK which took up its powers from 18th January and which oversees 22 regulatory bodies which supervise accountants, notaries and lawyers for compliance with AML/CFT requirements to ensure consistency and quality and to drive up standards across all professional body AML supervisors in the UK.
DON’T FORGET YOUR MODERN SLAVERY STATEMENT
On 9th January, Vinson & Elkins published a short note reminded UK businesses of the need to complete a modern slavery statement and reviewing updated guidance provided with which it must comply.
See also –
FINES FOR UK ESTATE AGENTS FOR BREACHING AML ETC RULES
On 22nd January, Business Insider reported claims that UK estate agents are being fined 6- and 7-figure sums for failing to comply with new AML and anti-tax-evasion legislation – but the fines are not being made public, according to the head of the National Association of Estate Agents, and that HMRC confirmed fines had been handed to estate agents, but could not say how many. It warned that money launderers are looking beyond high-end London locations to university towns to buy properties.
FIRST BLOCKCHAIN AGRICULTURAL COMMODITY TRADE
The International Business Times on 22nd January reports that ING, Societe Generale and ABN Amro in conjunction with Louis Dreyfus Company (LDC) and Shandong Bohi Industry Co., Ltd (Bohi), have successfully completed the first full agricultural commodity transaction using a blockchain platform. The trade included a full set of digitalised documents (sales contract, letter of credit, certificates) and automatic data-matching. Time spent on processing documents and data has been reduced 5-fold, said a statement. Other benefits include the ability to monitor the operation’s progress in real time, data verification, reduced risk of fraud, shorter cash cycle and so on.
VIETNAMESE BUSINESSMAN KIDNAPPED IN BERLIN GETS LIFE IN PRISON IN HANOI
Deutsche Welle reports that Tinh Xuan Thanh was among 20 former oil executives on trial for corruption in the SE Asian country. The German government had accused Vietnam of kidnapping Thanh in 2017 while he was walking in a Berlin park.
RIO TINTO COUNTERS SEC FRAUD CLAIMS
On 22nd January, Business Day in South Africa reported that Rio Tinto, a major resources company, has asked a US district court to dismiss a complaint brought against the company by the SEC regarding the behaviour of 2 former executives and the miner after the $3.7 billion purchase of a Mozambican coal prospect. In October 2017, the SEC outlined how former Rio Tinto CEO, Tom Albanese, and CFO, Guy Elliott, misled the group’s board and its shareholders in a disastrous purchase of a Mozambican coal project that had little value and was eventually sold for $50 million.
CHINESE BANK RECEIVES FINE FOR FRAUDULENT LENDING SCANDAL
China Economic Review on 22nd January reported that Shanghai Pudong Development Bank’s Chengdu branch has been given a $72 million penalty by the state banking regulator, following revelations of a large-scale shell company fraud. It reports that the branch had previously claimed to hold “zero” non-performing loans, but was found to have falsified loan applications and granted other unapproved funds to hide its poor credit situation, according to the China Banking Regulatory Commission.
US ARRESTS FORMER GUATEMALAN PRESIDENTIAL CANDIDATE
Deutsche Welle reports that US has arrested ex-Guatemalan presidential candidate Manuel Baldizon for graft charges. He allegedly took bribes from the giant Brazilian construction company, Odebrecht, to help them win public works contracts in Guatemala. The 47-year-old is reportedly seeking asylum in Miami.
BLOCKCHAIN IS STRENGTHENING TUNA TRACEABILITY TO COMBAT ILLEGAL FISHING
ABC Radio in Australia reports that the Blockchain is now helping to bring much-needed transparency to the global tuna industry, which has been prone to corruption, human slavery and unsustainable fishing practices, being used to improve tuna traceability to help stop illegal and unsustainable fishing practices in the Pacific Islands tuna industry. The WWF pilot project will use a combination of radio-frequency identification (RFID) tags, quick response (QR) code tags and scanning devices to collect information about the journey of a tuna at various points along the supply chain.
KERIMOV ALLOWED TO VISIT RUSSIA
UA Wire on 21st January reported that a French court released the Russian senator and billionaire Suleyman Kerimov for a short-term trip to Russia. He is accused by the French government of tax evasion and money laundering as part of an organized criminal group. His case involves illegal cash transfers of about €500 to €750 million and property in Monaco. It reports that Since 2008, the 51-year-old Kerimov has represented in the Federation Council of Dagestan, where he comes from. The businessman has long owned the Makhachkala soccer club Anzhi. Kerimov ranks 21st in the Russian Forbes list of top billionaires. The Kerimov family owns 82.44% of Polyus Gold International and the international airport of Makhachkala.
ICELAND SUPREME COURT UPHOLDS CHIPS IMPORT CHARGES
The BBC reports that the highest court in Iceland has upheld a ruling that the government can charge a 76% import charge on chips. Its Supreme Court dismissed a claim this week by 2 foodstuffs importers, Innes and Hager, who claimed that the whopping tariff on french fries “contradicted basic concepts of equality and proportion”.
WHAT WILL BE KEEPING LEGAL, RISK AND COMPLIANCE PROFESSIONALS AWAKE AT NIGHT IN 2018?
On 22nd January, Berwin Leighton Paisner published an article on the results of a survey of professionals which revealed that the top 3 risks were seen as GDPR, Brexit uncertainty and individual accountability and SMCR.
317 KG OF LIVE BABY EELS SEIZED IN PORTUGAL
On 22nd January, Portugal News Online reported that more than 19 hold bags containing 317 kg of live baby European eels a protected species that can only be caught on the river Minho in northern Portugal were seized at Lisbon airport. The seizure belonged to 8 passengers going to Vietnam with one of the most trafficked animals in the world that can cost up to €1,000 per kg.
“TROLLEY DRONE” AT BELARUS-LITHUANIA BORDER
The BBC on 17th January reported that Belarusian border guards on the frontier with Lithuania have had their first encounter with a drone on rails. The guards stepped to it and derailed the mini-carriage at the border. What they found was a home-made wagon, built like a shopping trolley, with an electric motor powered by 2 batteries, and steered by remote control. The guards think this was a trial run to see whether the “trolley drone” would make it across this particular crossing. Smuggling via the more conventional flying drones is already an issue.
HOW 2 MEN SMUGGLED MILLIONS OF ILLEGAL CIGARETTES INTO NORTH SHIELDS DOCKS
Chronicle Live reports how 2 men were caught in the act after smuggling more than 2 million illegal cigarettes hidden inside steel construction units. HMRC found Sandor Paloczi, 36, and Miklos Beca, 30, both of Hungary, trying to smuggle non-UK duty paid cigarettes worth £612,691 in unpaid taxes through the Port of Tyne September 2017. With photos of the concealment.
PODCAST: IT SHOULD BE THE EU “TRANSITION PHASE”
One Crown Office Row law chambers has re-broadcast a podcast – in December 2017, the principles of Britain’s divorce from the EU were agreed, and we now move to what Theresa May has called the “implementation phase”. But, as Professor Catherine Barnard of Cambridge University tells Bonnie Soames in this podcast, it should really be termed “the transition”.
WILL OPEN BANKING INVITE THE FRAUDSTERS IN?
In a short article on 18th January on the Tech UK website, poses this question and points one to a white paper from Tech UK providing further information. The article concludes that Open Banking and PSD2 together are innovations that will bring benefits to all users of financial services while putting security at its heart. techUK strongly believes this.
EXPANSION OF RUSSIA’S PRIVATE MILITARIES COULD FREE KREMLIN’S HAND FOR MORE INTERVENTIONS ABROAD
On 22nd January, Eurasia Review carried an opinion piece which points out that private military companies are illegal in Russia. Those that do exist operate outside the law domestically as well as internationally, and that has set up intense bureaucratic fights between the defence ministry and the FSB, and conflicts between those powerful agencies killed an effort to legalise such companies in 2014. It says that the issue has come up again because the Vagner Private Military Company sent “several thousand” of its employees to fight in Syria. They were nominally financed by Euro Police, a company controlled by St. Petersburg businessman Yevgeny Prigozhin, who is known as “the cook.” – supplied with guns and ammunition by the defence ministry which also imposed command on some but perhaps not all of the company’s people. If such PMC are legalized, then this could encourage more Russian interference abroad, being less politically sensitive and less affected by possible losses.
GOVERNMENT LAUNCHES NEW OFFICE FOR PRODUCT SAFETY AND STANDARDS
Local Government Lawyer reports on 22nd January that the Government has launched a new Office for Product Safety and Standards, which will be tasked with identifying consumer risks and managing responses to large-scale product recalls and repairs. The new oversight body “will enable the UK to meet the evolving challenges of product safety by responding to expanding international trade, the growth in online shopping and the increasing rate of product innovation”, the Department for Business, Energy and Industrial Strategy (BEIS) said.
HIGH-SPEED BOAT CHASES IN GIBRALTAR WATERS
Gibraltar Chronicle reports that over 430 fast moving rigid-hulled inflatable boats (RHIB) transited Gibraltar waters during the course of 2017, necessitating the intervention of Gibraltar’s law enforcement agencies in often high-speed and dangerous pursuits. HM Customs said it had engaged in 254 pursuits involving 350 RHIB last year, while the Royal Gibraltar Police said it had responded to 88 such incidents.
MIDDLE EAST AND TURKISH AIRLINES SUBJECT TO ADDITIONAL CARGO REPORTING CONTROLS BY THE US
Loadstar on 22nd January reported that w.e.f that day Etihad, Emirates, Qatar Airways, Saudia, Egyptair and Royal Jordanian must provide US authorities with more information on the cargo on flights to the US. It reports that 2 agencies, the TSA and CBP asked for extra protections owing to the perceived threat to aviation from the 5 countries, and that Turkey is also required to participate. It applies to cargo carried on both passenger and cargo aircraft.
EU ADDS 17 NAMES TO NORTH KOREAN SANCTIONS
On 22nd January, EU Regulation 2018/87/EU applied sanctions to a further 17 persons allegedly involved in evading sanctions on North Korea, making them subject to an asset freeze and travel restrictions.
Also Council Decision 2018/89/CFSP
EU IMPOSES SANCTIONS ON 7 VENEZUELAN INDIVIDUALS
On 22nd January, EU Regulation 2018/88/EU listed 7 persons holding official positions under its Venezuela sanctions Regulation 2017/2063/EU. They are alleged to be involved in the non-respect of democratic principles or the rule of law as well as in the violation of human rights, and are subject to measures that include a travel ban and an asset freeze.
Also Council Decision 2018/90/CFSP.
The HM Treasury news release of 22nd January at –
GUIDANCE FOR IMMIGRATION CHECKS FOR APPLICANTS FOR TAXI AND PRIVATE HIRE LICENCES
On 22nd January, the Home Office issued updated guidance for licensing authorities on how to check the immigration status of people who apply for a taxi or private hire licence.
COMMISSION LAUNCHES CONSULTATION ON FUTURE “COUNTERFEIT AND PIRACY WATCH-LIST”
On 22nd January, the European Commission launched a public consultation to establish its first worldwide “Counterfeit and Piracy Watch-List”. The aim is to identify the marketplaces outside the EU where counterfeiting, piracy or other forms of intellectual property abuse are common practice. The watch-list will help to raise awareness of consumers that might be buying products in those marketplaces, and encourage their operators and owners to crack down on intellectual property abuse. The Commission will also monitor the measures taken by local authorities to reduce the availability of goods and services infringing intellectual property rights in identified markets.
UK LIST OF THE 2 PERSONS SUBJECT TO FINANCIAL SANCTIONS ASSET-FREEZING ORDER
On 22nd January, HM Treasury issued a news release providing the current list of designated persons currently subject to financial sanctions under the Anti-Terrorism, Crime and Security Act 2001. These are the 2 Russians designated under the Andrey Lugovov and Dimitri Kovtun Freezing Order 2018.
NORTH KOREA TURNING TO CRYPTOCURRENCIES TO COUNTER ECONOMIC SANCTIONS
On 22nd January, US publication, The Hill, published an article saying that North Korean leaders appear to be looking toward a new tool to increase independence and ease some of the economic burden — cryptocurrency, and giving examples of recent cases involving hacking and thefts.
MAJOR CRIME GANG JAILED FOR 87 YEARS IN GLASGOW
The Evening Times reported that a major crime gang branded the “most sophisticated” in Scotland has been jailed for a total of 87 years. The 9-strong mob was locked up for their dealings in drugs, firearms, serious violence and dirty money. The list of crimes included the “merciless” torture of a man over an unpaid cocaine debt and a huge arsenal of weapons found hidden in a car. The group used “counter surveillance and anti-surveillance tactics” including specialist “signal jammers”.
REGULATORY POLICY COMMITTEE OPINION ON UK TRADE BILL
On 22nd January, the Regulatory Policy Committee (RPC) published its findings on the Trade Bill – which makes provision about the implementation of international trade agreements; to make provision establishing the Trade Remedies Authority and conferring functions on it; and to make provision about the collection and disclosure of information relating to trade. It also gave its opinion on the European Union (Withdrawal) Bill. The RPC is a non-departmental advisory body that provides the government with external, independent scrutiny of new regulatory and deregulatory proposals.
LISBON GRAFT TRIAL OF SENIOR ANGOLAN OFFICIAL OPENS
News 24 reports that the trial of Angolan former vice-president Manuel Vicente for alleged corruption opened in his absence Lisbon, Portugal, raising tensions between oil-rich Angola and its former colonial ruler. Vicente, who headed Angola’s state oil company Sonangol, is accused by the Portuguese attorney general of bribing prosecutor Orlando Figueira $934,600 to scrap 2 probes into suspected money-laundering opened in 2011.
RISING TENSIONS AS TRUMP ADMINISTRATION PREPARES TO ANNOUNCE RESULTS INVESTIGATION INTO CHINA’S ALLEGED IP RIGHTS VIOLATIONS
On 22nd January, in its Trade Secrets Watch, law firm Orrick reported that tensions between the US and China were rising after a draft report of an investigation ordered by the US Trade Representative (USTR) is said to be circulating. This is on top of in August President Trump signing an executive memo asking the USTR to determine whether to launch an investigation into China’s alleged theft of intellectual property.
AUSTRALIAN BETTING SYNDICATE LEADER FACING DECEPTION CHARGES
On 22nd January, Calvin Ayre reported that former Australian betting syndicate leader Bill Vlahos is facing over 300 counts of financial deception for allegedly defrauding hundreds of investors between 2008 and 2013; with allegations that he swindled millions of dollars from people who invested in betting syndicate, The Edge.
CANADIAN BODY TO MONITOR COMPANIES’ HUMAN RIGHTS PERFORMANCE
On 22nd January, Hogan Lovells reported that Canada announced the creation of the Canadian Ombudsperson for Responsible Enterprise (CORE), an independent officer who will be tasked with investigating allegations of human rights abuses linked to Canadian corporations operating abroad. Although the CORE will not have the power to impose sanctions or penalties, its investigations and any findings or recommendations, will be made public. The article describes it as an unprecedented step, and one that will be of particular interest to the world’s mining industry – 60% of which is based in Canada.
HMRC SEARCH WARRANTS FOR EX-KPMG PARTNERS IN NORTHERN IRELAND WERE ILLEGAL
On 22nd January, Out-Law reported that the High Court in Northern Ireland has held that warrants used by HMRC to search the homes and offices of 4 former KPMG partners were unlawful, as they did not clearly set out who the alleged offenders were and the power to search for other items likely to be kept at the address was too wide. But challenges to HMRC’s behaviour in applying for the warrants in the first place failed. The article says that the case illustrates importance of taking legal advice on an HMRC raid and checking the terms of any warrant carefully.
PODCAST: SPOTLIGHT ON MEXICAN ANTI-BRIBERY
In the latest TRACE podcast, Daniel Maldonado discusses Mexico’s ramped-up anti-bribery enforcement efforts, where problems still linger and how the WalMart case is perceived there.
REPORT SHOWS GROWING CYBER RISK AND FRAUDSTERS TARGETING CONFIDENTIAL INFORMATION
On 22nd January, Out-Law reported that security consultancy Kroll has reported the results of a survey that reveals that fraudsters are targeting confidential information held by businesses more than money, stock or other physical assets. For the first time since Kroll began reporting on fraud a decade ago that information fraud has been cited as more prevalent than cases of fraud by theft of physical assets or stock.
SEIZURE OF DATA AND DOCUMENTS IN INTERNAL INVESTIGATIONS IN GERMANY
Baker McKenzie Global Compliance News on 22nd January carried a feature analysing the position of client-lawyer privilege in Germany looking at the status quo and providing conceptual suggestions for an investigations-related attorney-client privilege. Whilst documents that were seized have not been reviewed by the authorities, the article says that a final assessment of whether the public prosecutor’s office is allowed to review and use the documents will be issued by the Federal Constitutional Court. The Court already indicated that the primarily focus will be on the extent to which the relationship between attorney and client is protected by fundamental rights.