23rd January 2018
GERMANY ENDS ARMS SALES TO SAUDI ARABIA, PRESSURE ON CANADA
The Globe & Mail newspaper in Canada carries a piece about Germany suspending arms sales to Saudi Arabia on 19th January and saying this adds to pressure on Canada to also act – Canadian-built armoured vehicles having been seen used in the conflict in Yemen.
INSIGHT INTO A US ELECTRONIC WARFARE EQUIPMENT COMPANY
The North Bay Business Journal in the US carries an article about electronics company, Keysight technologies, which provides an interesting insight not only into their specialist products (for example for jamming radio and radar transmissions) in the “electronic warfare” environment – 30% of their output is for the US military – but also of the types of equipment and its uses in the field. It also highlights that even this company can be exporting equipment not just to potentially sensitive customers like India, but even to Russia and China (non-strategic, run of the mill equipment such as voltmeters) – though nothing to Iran or North Korea, of course.
RABOBANK IN US TO PAY $373 MILLION FOR MONEY LAUNDERING FOR DRUG CARTELS
On 22nd January, Cal Coast News in California reports on what it says appears to be an attempt to avoid a criminal indictment by Dutch-owned Rabobank is planning to pay a $373 million fine to the US government for alleged money laundering for Mexican drug cartels, allegations first raised by an Arroyo Grande branch bank employee. It is said that, beginning in about 2010, bank management would routinely send armoured trucks to pick up cash at its branch in Calexico, a tiny town just across the border from Mexicali. Wire transfers were then sent from the Rabobank in Calexico to customers across the border, according to bank insiders.
WHO SHOULD PAY FOR FINANCIAL TRANSPARENCY? BANKS OR GOVERNMENT?
The New York Times discusses the issue of who pays for AML/CFT compliance, saying that it is taking on added urgency with new financial regulations due in the US to fight money laundering and foreign corruption through increased transparency set to take effect in May. Complying with these rules, it turns out, is not a cheap proposition, and the banks want to shift at least some of those added costs to the federal government.
IMF CALLS FOR INTERNATIONAL CO-OPERATION ON CRYPTOCURRENCIES
Coindesk on 22nd January reported that the IMF has called for global co-ordination on cryptocurrencies, warning of the risks of surging cryptocurrency prices. According to a Bloomberg report, IMF spokesman Gerry Rice said that there is a need for “greater international discussion and co-operation among regulators.”
OCC REPORT: CYBERSECURITY AND MONEY LAUNDERING THREATS ARE THE KEY RISKS FACING BANKS IN US
On 22nd January, the National Law Review in the US reported that the Office of the Comptroller of the Currency released its semi-annual risk report highlighting credit, operational, and compliance risks to the federal banking system. The Report focuses on issues that pose threats to those financial institutions regulated by the OCC and is intended to be used as a resource to by those financial institutions to address the key concerns identified by the OCC. Specifically, it says, the OCC places cybersecurity and AML among the top concerns highlighted in the Report, which further observes that the total number of enforcement actions by the OCC against banks — instituted for any kind of alleged violations — have declined steadily after peaking in 2009.
CAYMAN AML REGIME UNDER REVIEW
Hedge Week reports that, with an impending review by FATF the Cayman Islands has undertaken an overhaul of its laws, regulations and guidance notes which govern its AML/CFT regime. It says that revisions to the laws, regulations and guidance notes are extensive but the impact on the funds industry is generally to add clarity and to confirm that existing approaches to compliance through delegation to a regulated and approved administrator continue to be available. The article reflects on the effects of the changes on the funds industry in the Cayman islands.
INTERNATIONAL TRADE COMPLIANCE UPDATE – JANUARY 2018
Baker McKenzie has published the January 2018 edition of its International Trade Compliance newsletter, a comprehensive review that includes updates on the new UN sanctions on North Korea, the Global Magnitsky sanctions in the US, the revised OFAC Cuba policies.
EU ANTI-DUMPING CASES EXAMPLE
On 19th January, NCTM Studio Legale of Italy published an article examining how EU anti-dumping cases are dealt with, using a Chinese exporter of tartaric acid as an example.
10 THINGS TO KNOW ABOUT THE AVIATION INDUSTRY IN IRELAND
Mason, Hayes and Curran has published an article including such nuggets as revealing that Ireland hosts with 14 of the top 15 major aviation leasing companies; more than $120 billion worth of aviation assets are managed from Ireland, representing about 50% of the worlds leased aircraft fleet; from June 2018, Ireland is set to get its first-ever direct Asia-Pacific air route to Hong Kong which shall be operated by Cathay Pacific; Ireland has a competitive tax regime for aviation companies.
OPBAS – NEW UK AML SUPERVISOR BECOMES OPERATIONAL
On 16th January, Allen & Overy produced an introduction to OPBAS – Office for Professional Body Anti-Money Laundering Supervision.
PPI NUISANCE CALLS RESULT IN £350,000 FINE
On 19th January, Addleshaw Goddard reported that a claims company, Miss-sold Products UK that made around 75 million automated nuisance phone calls about PPI in 4 months has been fined £350,000 by the UK Information Commissioner’s Office.
CYBER CRIME BECOMING MORE COMPLEX, SAYS EUROPEAN AGENCY
Also in 19th January, Addleshaw Goddard reports that the European Union Agency for Network and Information Security (ENISA) says that the complexity of cybercrime attacks has inguatecreased in conjunction with criminals’ greater ability to hide their trails; and further trends highlighted for 2017 included the omnipresence of state-sponsored cyber-criminals, the monetisation of cybercrime and the move towards anonymisation, encryption and detection evasion of malicious infrastructures.
CONDITIONS FOR RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS IN THE BVI
On 16th November, Harneys published this guide.
“CIA DIVERS SEARCH FOR PABLO ESCOBAR’S MISSING MILLIONS ON SUBMARINE”
On 23rd January, the Mirror claimed that one of the subs which could carry up to 2,000 kg of cocaine into the waters off Puerto Rico before loaders put the drugs on speed boats and transported them to Miami. It says that a video “Diving For The Wreck of Escobar’s Submarine” has been uploaded to Discovery UK on YouTube.
EU COUNCIL DECISION ON THE PROMOTION OF AN EFFECTIVE ARMS CONTROL
On 22nd January, EU Council Decision 2018/1018/CFSP came into force which seeks to set a clear policy for the promotion of effective arms control, and the objectives it would pursue, including controls on dual-use items and membership of the UN Arms Trade Treaty. It provides for projects, workshops and assistance to non-EU states.
COMPANIES HOUSE: “BLACK HOLE” IN UK AML REGIME
On 23rd January, Business Insider reported accusations that the UK government’s system for registering new companies is a “gaping black hole” in defences against money laundering and fraud, according to David Stevens, Integrity and Law Manager at the Institute of Chartered Accountants in England and Wales (ICAEW). Companies House, is not subject to the same scrutiny as private businesses that offer company formation services, and Companies House is exempt from the requirements of the 4th AML Directive since it is not considered a commercial business provider.
On 22nd January, the House of Commons Library published a briefing on the situation in Lebanon. The resignation of Saad Hariri, Lebanese Prime Minister, then his withdrawal of that resignation drew attention to Lebanon’s entanglement with the struggle between Saudi Arabia and Iran for influence in the region. It notes that political violence has been widespread in Lebanon even after the fragile peace and power-sharing arrangements of 1989 – Iran, Syria, Saudi Arabia and Israel are all variously accused of being ultimately behind the violence. A UN Special Tribunal, set up to investigate the assassination of Rafiq Hariri, a former PM and father of the present PM, has issued indictments against 4 supporters of Hizbollah; they are being tried in their absence. Others accuse Syria, Iran, Israel and Saudi Arabia of being behind the murder, however.
BREXIT: KEY ISSUES FACING ASSET MANAGERS
EY has produced a report on the 8 key issues that asset managers may face as a result of Brexit.
IATA/FIATA AIR CARGO PROGRAM PILOTED
US law firm, Benesch, reports that the relationship between airlines and air freight forwarders are looking to changing their global relationship for the first time in decades with the launch of a new International Air Transport Association (IATA) and International Federation of Freight Forwarders’ Association (FIATA) Air Cargo Program (ACP). Canada was selected as the pilot country for the new ACP. It reports that the key difference between the ACP and the legacy IATA Cargo Agency Agreement is that air forwarders are recognised as principals in their own right in a buyer-seller relationship with the airlines – forwarders will bear direct responsibility to their shippers rather than serving as sales agents for the airlines. However, it says that the use of air waybills by forwarders will not dramatically change.
RARE LIZARD FOUND AT HEATHROW AIRPORT
Border Force on 22nd January published a news release saying that specialist Border Force officers have seized a live lizard – a juvenile monitor lizard (Varanus Bengalensis), which was about 30cm long – at Heathrow Airport following a suspected smuggling attempt. It was found scurrying around the staff area of Terminal 4’s baggage sorting area. It is not known where the reptile’s journey started, but it is believed to be a Bengal variety of monitor lizard.
DAVID BAAZOV TRIAL TO GO AHEAD
Calvin Ayre on 23rd January reports that the trial of former Amaya/Pokerstars owner, David Baazov, for insider trading will go ahead, after a Quebec judge refused to stay the charges. A Provincial Court Judge rejected motions to stay the case due to the length of time it had taken for prosecutors to bring his case to trial, which was supposed to have begun in December and also includes 2 other defendants, Yoel Altman and Benjamin Ahdoot.
FRENCH COURT ENDS JP MORGAN CHASE/WENDEL TAX FRAUD CASE
Customs Today on 23rd January reported that a French appeals court has dropped a case against JPMorgan Chase for allegedly aiding tax fraud at the Wendel investment group, citing clerical errors. Prosecutors had suspected the US bank of helping Wendel top managers to hide more than €300 million from the French taxman in 2007 and 2008, and in 2016 ordered it to stand trial for “complicity in tax fraud”, alongside current and former Wendel top brass. The latter included former chairman Jean-Bernard Lafonta and Ernest-Antoine Seilliere, who for 7 years also ran French employers lobby group Medef.
CANADIAN COUPLE FACING PROSECUTION FOR 5 YEARS OF DODGING CUSTOMS CHARGES
WCO Iris and the Herald News reports that a Halifax, Nova Scotia couple stand accused of sneaking almost $200,000 worth of high-end jewelry, clothing and leather goods purchased abroad into Canada over a 5-year period. The Canada Border Services Agency alleges the offences were committed between January 2013 and July 2017, when the couple made numerous trips outside the country.
HOW CUSTOMS OFFICERS CONSPIRED TO SMUGGLE 661 RIFLES INTO NIGERIA
New Telegraph Online in Nigeria reports how 2 customs officers conspired with 4 others to illegally import 661 pump-action rifles into Nigeria last year. The revelation was made during the ongoing trial of the 6 accused for alleged conspiracy, importation of prohibited firearms, forgery and bribery.
IRISH CUSTOMS SEIZE 2 MILLION CIGARETTES FROM DUBAI
The Irish Revenue Commissioners in a news release revealed that on 19th January, in Dublin Port, officers seized 2 million smuggled cigarettes concealed in a 20-foot shipping container that originated in Dubai.
NEW PRECISION WEAPONS UPSETTING THE STRATEGIC BALANCE?
On 26th December, the Middlebury Institute of International Studies at Monterey published an excerpt of an article originally published in the National Interest magazine. This reflected on the detrimental effects of the acquisition of precision-guided long-range conventional strike weapons by Russia (with China likely to follow, and then India and probably others) upsets the delicate balance of deterrence, following a long period where the US enjoyed an effective monopoly in such things. It states that “The spread of accurate and inexpensive weapons and the use of cyber tools have allowed state and non-state competitors to harm the United States across various domains. Such capabilities contest what was until recently US dominance across the land, air, maritime, space, and cyberspace domains. They also enable adversaries to attempt strategic attacks against the United States—without resorting to nuclear weapons—in ways that could cripple our economy and our ability to deploy our military forces”.
RUSSIAN LAWMAKER KERIMOV “BACK IN FRANCE FOR TAX INVESTIGATION”
KYC 360 reported on 23rd January reported that Russian businessman and lawmaker Suleiman Kerimov, under investigation for tax fraud in France, returned to the Riviera city of Nice after making a short trip to Russia that was allowed by the French authorities, the Nice prosecutor said.
SOUTH KOREA TO BAN CRYPTOCURRENCY TRADERS FROM USING ANONYMOUS BANK ACCOUNTS
On 23rd January KYC 360 reported that South Korea will ban the use of anonymous bank accounts in cryptocurrency trading from 30th January, regulators said in a widely telegraphed move designed to stop virtual coins from being used for money laundering and other crimes. The measure comes on top of stepped up efforts by Seoul to temper citizens’ obsession with cryptocurrencies.
DRONES AND PRIVACY
On 23rd January, law firm Corker Binning published an article that begins by saying that the legality of drone activity is usually questioned only in the context of foreign warfare. However, the exponential rate of technological advancement in this area also raises criminal law questions stemming from the invasion of a person’s privacy.
WHAT ARE SERIOUS ORGANISED CRIME PREVENTION ORDERS?
On 23rd January the BBC published an article on these orders, saying that they form part of the Serious Crime Act 2015 and have been available to courts since March 2016. SCPO are designed to ensure the “lifetime management” of criminals, including their business dealings, communications and movements once they are released from jail. The orders can also limit their access to mobile phones and require them to notify police about all foreign travel. In theory, they are designed to make it as difficult as possible for offenders to return to a life of crime when they are released. The model has been compared to the management of sex offenders in that it can place restrictions on criminals until they day they die. The article is triggered by 9 members of a crime gang responsible for importing industrial quantities of cocaine and firearms into Scotland facing SCPO on top of their jail terms totalling 87 years.
EU REMOVES 8 COUNTRIES FROM BLACKLIST
On 23rd January the EU Observer reported that the EU had removed 8 countries from its tax blacklist – Barbados, Grenada, South Korea, Macao, Mongolia, Panama, Tunisia and UAE were taken from the list of 17 “non-cooperative” countries and jurisdictions that was only established in December. Instead they were added to a ‘grey’ list of some 50 jurisdictions that have pledged to change their legislation on taxation but have still to take and implement measures.
EU FIREARMS DIRECTIVE DOES NOT APPLY TO GIBRALTAR
EurActiv on 23rd January reported that the EU Court of Justice has ruled that the Firearms Directive does not apply to Gibraltar. In 2015, the president of the Gibraltar Target Shooting Association requested European Firearm Passes (EFP) for members of his group, which are issued under EU law, and allow holders to transport one or more registered firearms from one Member State to another, in order to compete in competitions or sell the weapon. However, the Directive in question does not apply to Gibraltar as it is exempted from freedom of movement rules.
IRISH HIGH COURT RULES €875,000 IS THE PROCEEDS OF CRIME
The Irish Times on 23rd January reported that the Irish High Court has ruled €875,000 held in bank accounts controlled by a man whom the Criminal Assets Bureau claim is involved in money laundering are the proceeds of crime.CAB sought orders in relation to monies held in several accounts belonging to Adam Shina Muhammed, from Dublin who denied being involved in money laundering and claimed the monies were loans for his business called Eirclean. The money was transferred to the Irish-based accounts from locations including Hong Kong, China, the US and Nigeria in 2014/15, and CAB said approximately €1.5 million was lodged, via several 6-figure sums, to the Irish accounts.
IRISH HIGH COURT RULES SEIZED CAR IS PROCEEDS OF CRIME
Also on 23rd January, the Irish Times reported that an 2015 Audi car valued at €25,000 which CAB alleged belonged to a member of a criminal gang has been held by the High Court to constitute the proceeds of crime. The Audi A3 which it claimed was owned by Patrick Reilly junior, also known as Patrick O’Donoghue and Patrick Rubber O’Reilly, from Wexford was seized by the garda in 2016.
US ADDS 3 NAMES TO TERRORISM LISTS
On 23rd January OFAC added 3 names to its terrorist sanctions list – ISIS members Khalid Batarfi, a Saudi national; Siddhartha Dhar, a UK national; and Abdelatif Gaini, a Belgian or Moroccan citizen and the leader of al-Qa’ida in the Arabian Peninsula,.
LEBANON CLAIMS IT IS VIGOROUSLY FIGHTING MONEY LAUNDERING
On 23rd January news agency NNA carried a report saying that Speaker of the House, Nabih Berri, maintained that Lebanon was vigorously fighting money laundering and terrorist funding, during his meeting with the Assistant Secretary for Terrorist Financing at the US Treasury.
UK-FRANCE AGREEMENT ON FIGHTING SPORTS CORRUPTION
Gambling Insider on 23rd January reports that sports ministers from the British and French governments have put pen to paper on a deal that will see them share expertise in tackling sports corruption and match-fixing.
UK LISTS 17 INDIVIDUALS UNDER NORTH KOREAN SANCTIONS
On 23RD January, HM Treasury published a news release listing the 17 individuals designated by the EU under its North Korean sanctions regime on 22nd January.
DUTCH FARMERS ALLEGEDLY FIDDLING CATTLE BIRTH NUMBERS TO MASK POLLUTION
Dutch News on 23Rd January reported that it appears that many Dutch farmers are fiddling the books about the age of the cows they have, allowing them to get round strict rules on manure and phosphate reduction, after ministry inspectors found fraud in the registration of calves on half the 93 farms they visited. Adult cows are more polluting, so farmers are passing some older calves off as younger animals by claiming that their cows have given birth to twins or triplets. This enables them to reduce the amount of manure and phosphates each cow had produced on paper.
RUSSIAN COURT SENTENCES US CITIZEN TO PRISON IN ABSENTIA FOR FRAUD
Rferl on 23rd January reported that a Russian court has convicted Soviet-born New York real-estate developer and socialite Janna Bullock of large-scale fraud and money laundering and sentenced her to 11 years in prison after a trial in absentia, being convicted of stealing billions of rubles from the budget of the Moscow region. Bullock has repeatedly said she and her ex-husband, Aleksei Kuznetsov, are victims of corruption in Russia, accusing former business partners of colluding with officials to steal from a business empire whose worth she once estimated at around $2 billion.
VERMONT BECOMES NINTH US STATE TO LEGALISE MARIJUANA
The Week on 23rd January reported that Vermont had become the 9th state in the US to legalise the use of marijuana.
EGYPT MILITARY ACCUSES SISI PRESIDENTIAL RIVAL OF CRIMES
On 23rd January, the Mail online reported that Egypt’s military had accused a former armed forces chief of staff who plans to challenge President al-Sisi in March elections of forgery and other crimes linked to his candidacy announcement in a video on the armed forces’ Facebook site. General Sami Anan’s campaign team said he had been arrested but there was no official confirmation.
ISRAEL AND INDIA: THE TIES THAT BIND
On 23rd January the Royal United Services Institute published an article on the longstanding relationship between Israel and India. It points out, for example, that Israel is India’s third-largest arms supplier, at 7.2%, after Russia (68%) and the US (14%, and that military ties are at the heart of the relationship. As far back as 1965, suffering from a US and Soviet weapons boycott during the war with China, India mortars and small arms received from Israel. And in 1971, Prime Minister Indira Gandhi asked her Israeli counterpart, Golda Meir, for weapons to help fight Pakistan. Meir agreed, diverting weapons ordered by Iran – with which Israel had close ties until the fall of the Shah in 1979 – to India. However, it does point out that not all is sweetness and light in the relationship. New Delhi is helping Iran to develop its Chabahar port. It backs Palestinian demands for statehood, and last month joined the 128 nations that voted at the UN to denounce US President Donald Trump’s recognition of Jerusalem as Israel’s capital.
EU TO MAINTAIN SANCTIONS ON MUGABE
The European Sanctions Blog on 23rd January reported that the EU has announced that it is considering maintaining sanctions against Zimbabwe’s former Prime Minister, Robert Gabriel Mugabe, on the basis of a new statement of reasons.
US AND EU TO MEET ON JCPOA
On 22nd January the Wall Street Journal reported that the US and 3 EU countries (UK, France and Germany) will begin formal talks as early as the following week on what the Trump Administration considers flaws in the 2015 JCPOA Iran nuclear agreement, but US Secretary of State Rex Tillerson has said they might not meet a White House deadline for a fix. President Trump said earlier this month he wouldn’t renew U.S. sanctions relief to Iran in May.