THINGS YOU MAY HAVE MISSED – JANUARY 28

IMF, ACTIVIST, ASK FOR ACTION AFTER SRI LANKA PLACED UNDER MONEY LAUNDERING SCRUTINY

Economy Next on 28th January reported that Sri Lanka was placed under monitoring by the IMF due to ‘strategic deficiencies” in its AML/CFT controls, and was classed among high risk and non-compliant countries.  However the country is among those that have a ‘high level political commitment’ to fix shortcomings, the agency said.  Both the IMF and a leading activist in Sri Lanka have called for changes.

Sri Lanka’s cabinet has already approved changes to the Trust Law, which requires beneficiaries to be named to the FIU, issued sanctions on North Korea.  This month a series of rules on customer due diligence and Designated Non-Financial Businesses and Professions have issued by gazette by the FIU. Some of the controls and restrictions placed on citizens have been issued without gaining parliamentary approval or public debate.

http://economynext.com/IMF,_activist,_ask_for_action_after_Sri_Lanka_placed_under_money_laundering_scrutiny-3-9691.html

On 3rd November, FATF said about Sri Lanka –

In October 2017, Sri Lanka made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime and address any related technical deficiencies. Sri Lanka will work to implement its action plan to accomplish these objectives, including by:

  • enacting amendments to the MACMA to ensure that mutual legal assistance may be provided on the basis of reciprocity;
  • issuing the CDD Rule for DNFBPs, issuing any necessary guidance, and ensuring implementation of this Rule has begun, by way of supervisory actions;
  • enhancing risk-based supervision and outreach to FIs, and high risk DNFBPs, including through prompt and dissuasive enforcement actions and sanctions, as appropriate;
  • providing case studies and statistics to demonstrate that competent authorities can obtain beneficial ownership information in relation to legal persons in a timely manner;
  • issuing a revised Trust Ordinance and demonstrating that implementation has begun; and
  • establishing a TFS regime to implement the relevant UNSCRs related to Iran, demonstrating that implementation has begun, and demonstrating that implementation has begun on the UN Regulation related to the DPRK.

www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-november-2017.html

See also the Sri Lanka Sunday Times –

http://www.sundaytimes.lk/180128/news/tough-new-rules-for-casinos-gambling-houses-and-lottery-businesses-279046.html

IRAN ACCELERATING REFORMS AHEAD OF FATF DEADLINE

On 28th January, the Financial Tribune, described as an Iranian English economic daily, reports that determined to permanently exit the blacklist of FATF, Iran has accelerated the pace of reforms to implement the action plan recommended by the FATF that monitors money laundering worldwide.  It reports that the January-end deadline is fast approaching for the country to report its progress in implementing its action plan to the International Cooperation Review Group (ICRG) — the FATF body that analyses high-risk jurisdictions and recommends specific action to address their money laundering/financing of terrorism risks, the government is hoping to pass some important legislation.   Iran had a meeting in Rome on 18th January with ICRG to discuss progress.  According to the Economy Ministry sources whose FIU handles the negotiations, both sides viewed the talks as constructive.  If Iran can make the same progress with FATF by 31st January, or at the FATF plenary meeting on 15th February, a new chapter could open for the country on the international scene.  Meanwhile, the article reports that Iran this week also saw its risk rating upgraded from 6 to 5 by the OECD.

https://financialtribune.com/articles/economy-business-and-markets/80907/iran-accelerating-reforms-ahead-of-fatf-deadline

SOUTH AFRICAN MINISTER EXPECTED TO BE CHARGED WITH MONEY-LAUNDERING

eNCA.com in South Africa reports that Mineral Resources Minister Mosebenzi Zwane will reportedly be accused number one in what is set to become the first state capture case that will head to court.  It says that The Sunday Times is reporting Zwane, Gupta brothers Atul, Rajesh and Ajay and their associates will be charged with money laundering.  Zwane is said to be implicated in the controversial 2013 Gupta-linked Estina Dairy farm project in Vrede in the Free State.

http://www.enca.com/south-africa/zwane-expected-to-be-charged-with-money-laundering-report?src=ilaw

UK GOVERNMENT TO RESEARCH WHETHER COMPANIES BUY BACK THEIR OWN SHARES TO INFLATE EXECUTIVE PAY

On 28th January, the UK Department for Business, Energy and Industrial Strategy announced that the Government is to research whether companies buy back their own shares to inflate executive pay.  This new research will help the Government to understand how companies use share buybacks and is intended to maintain the public’s trust in big business and corporate standards.  A share buyback is where a company buys back its own shares from the market, often to reduce the number of available shares in order to increase their value. While there are a number of valid reasons why a company would use these schemes, there are concerns that a minority of companies are using them to inflate executive pay and that they can crowd out investment.

https://www.gov.uk/government/news/government-to-research-whether-companies-buy-back-their-own-shares-to-inflate-executive-pay

DESPITE TRUMP’S THREATS, CHEMICAL ATTACKS CONTINUE IN SYRIA

On 23rd January, the website Bellingcat carried an article that says that the lack of press reports about chemical weapon attacks in Syria may lead the casual observer to assume chemical weapon use in Syria had ceased, until the January 22nd chlorine attack in Damascus.  However, it claims that many more attacks have been alleged throughout 2017 and into 2018, with many attacks reported after the US airstrikes on Shayrat Airbase (intended as a warning against such furtherattacks), and since the beginning of the year at least 4 attacks have been reported.

https://www.bellingcat.com/news/mena/2018/01/23/despite-trumps-threats-chemical-attacks-continue-syria/

SAUDIS SET UP SPECIAL COURTS TO HEAR CORRUPTION CASES

On 28th January the Saudi Gazette reported that the Supreme Judicial Council has established 2 criminal circuits in the criminal courts of Riyadh and Jeddah to look into corruption cases of suspects who refuse to make settlements by insisting on going to the court.   It says that, according to reliable sources, each circuit consists of 3 judges who will consider the charges against those who refuse to make settlement with the government.

http://saudigazette.com.sa/article/527152/SAUDI-ARABIA/Graft-cases-2-criminal-circuits-set-up?src=ilaw

AFRICAN COUNTRIES LOSING $100 BILLION ANNUALLY?

On 28th January the ANI news agency reported that African n countries could be losing $100 billion annually through corruption, according to a senior African development expert who was speaking on the sidelines of the 30th African Union Summit in Ethiopia.  Emmanuel Nnaozie, executive secretary of the African Capacity Building Foundation, the AU specialised agency for capacity development, said adding that, “the amount of money Africa is losing through corruption might have been seriously underestimated”.

https://www.aninews.in/news/world/others/african-countries-losing-100-billion-dollars-annually201801282013050001/?src=ilaw

ISRAELI REGULATOR MAKES ADVERT WARNING AGAINST FRAUD – STARRING EX-BINARY OPTIONS FIRM OWNER

On 28th January the Times of Israel reported that the Israel Securities Authority suffered public ridicule when it was revealed that a celebrity basketball coach it recruited to star in a publicity campaign warning the public against fraudulent investments had been the owner of a binary options company.

https://www.timesofisrael.com/regulator-makes-ad-warning-against-fraud-starring-ex-binary-options-firm-owner/?src=ilaw

FCA NEW WARNING TO PUBLIC OVER INVESTMENT FRAUD RISKS

City AM on 28th January reported that the UK FCA had issued a fresh warning to consumers over bitcoin and other cryptocurrencies that are luring people into scams online.  It fears that investors are now being targeted by fraudsters on Facebook, Instagram and Twitter, more than they are over the telephone, tempting people to put cash into cryptocurrencies and other financial products such as binary options, contracts for difference (CFD) and forex.

www.cityam.com/279571/fcas-issued-fresh-warning-bitcoin-crytocurrency-and-binary

NEW GEORGIAN LOTTERY CO-OWNER “HAS BULGARIAN CRIME LINKS”

On 14th December OCCRP had carried an article making claims about Bulgarian gaming czar Vasil Bozhkov, who has acquired a 25% share in the lottery, and who has successfully operated several gambling businesses in his home country, being one of its richest men.   It says that, according to US diplomats, he has allegedly been involved in a series of crimes including money laundering, privatisation fraud, extortion, and racketeering, and also has close ties to organised crime groups, and is nicknamed “The Skull”.  The other 75% shareholding went to a company owned by Georgian businessman Koba Ghurtskaia, whose holdings in telecommunications have ties with Bulgaria.  The sale is said to be necessary given problems that led to a over $90 million government loss on the lottery since August 2011.  Davit Kezerashvili, Georgia’s former Minister of Defense, who is named in the article in connection with the debacle, fled the country after being accused of stealing tens of millions in cash and properties, and after a stay in France, he is said to be now living in England despite attempts by Georgia to have him extradited.

https://www.occrp.org/en/28-ccwatch/cc-watch-indepth/7402-new-georgian-lottery-co-owner-has-bulgarian-crime-links

UAE REMOVED FROM EU BLACK LIST – WHAT ARE THE CONSEQUENCES?

On 25th January, law firm Loyens & Loeff published a briefing on transfer of the UAE from a EU blacklist to a grey list.  This entails that the UAE has committed to adhere to the minimum standards of the OECD’s Action Plan for the avoidance of Base Erosion and Profit Shifting (BEPS) by 31st December.  The briefing poses the questions – what does this actually mean? What are the BEPS minimum standards and how does it affect businesses established in the UAE?

https://www.loyensloeff.com/en-us/news-events/news/uae-removed-from-eu-black-list-what-are-the-consequences

NIGER – TERRORISM AND ARMS TRAFFIKCING IN AND THROUGH THE COUNTRY

The Small Arms Survey website informs one that a new Report from the Small Arms Survey’s Security: At the Crossroads of Sahelian Conflicts: Insecurity, Terrorism, and Arms Trafficking in Niger.  Assessment in North Africa (SANA) project examines insecurity, terrorism, and trafficking in Niger.  It points out that the Sahel region hosts multiple conflicts with myriad armed actors destabilizing the entire region. Positioned at the heart of this region, Niger sits at the crossroads of terrorism, trafficking, and conflict.   The Report includes examinations of arms and ammunition seized across the country, as well as dozens of interviews with national and international government and security officials, civil society representatives, gold diggers, former rebels, and other experts.  Until 2015 Niger was relatively spared by the threat of terrorism but with an increase in attacks in Niger since then, first by Boko Haram and then by AQIM-related groups or splinter cells.  The Report notes that Niger has served as a key transit route for weapons heading to conflict zones in the region, but the deterioration of the country’s security situation has resulted in an increase in the domestic demand for weapons, particularly for small arms and ammunition.  From an arms control perspective, it is notable that arms seized from terrorists, or en route to terrorist groups in Niger over the past 5 years include explosives, small arms and light weapons and ammunition, including MANPADS, machine guns, and mortar rounds, as well as vehicles.   Furthermore, terrorist groups operating in Niger, including those based in Mali and Nigeria, have been obtaining materiel from a variety of sources­ — including from national stockpiles in the region — either following the collapse of state control over arsenals, as in Libya or northern Mali, attacks against security positions, or diversion in countries like Niger or Nigeria.

http://www.smallarmssurvey.org/about-us/highlights/2017/highlight-sana-niger.html

US UPDATES EXPORT CONTROL “ENTITY LIST”

On 26th January, Baker McKenzie reported changes to the US “Entity List”.  The Bureau of Industry and Security (BIS) had published a final rule adding 21 persons who have been determined by the US Government to be acting contrary to the national security or foreign policy interests of the US. These 21 persons will be listed on the Entity List under the destinations of Bulgaria, China, Kazakhstan, Russia, Syria, and UAE.  In addition, the rule removes 3 entities from the Entity List – 1 listed under the destination of Taiwan and 2 entities listed under the destination of the UAE.

The Entity List is contained in the Export Administration Regulations (EAR), being  a list of names of certain foreign persons – including businesses, research institutions, government and private organizations, individuals, and other types of legal persons – that are subject to specific licence requirements for the export, re-export and/or transfer (in-country) of specified items.

For information on what the Entity List means, see –

https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern/entity-list

http://www.internationaltradecomplianceupdate.com/?author_name=international-trade-compliance-blog

REPORT REPORT HIGHLIGHTS ONGOING CYBER CONCERNS FOR US DEFENCE

On 26th January, Janes.com reported that US Department of Defense (DoD) network defences contain exploitable problems that give adversaries opportunities to access its networks, according to the FY17 Annual Report from The Office of the Director, Operational Test and Evaluation (DOT&E).

www.janes.com/article/77392/dot-e-report-highlights-ongoing-cyber-concerns

NORTH KOREA MISSILE THREAT REVIVES TALK OF ‘STAR WARS’

VoA on 25th January carried an article saying that scientists and NASA officials who spearheaded development of a space-based missile defense system in the 1980s are urging its revival to counter emerging nuclear threats from North Korea and other rogue states.

https://www.voanews.com/a/north-korea-missiles-talk-to-star-wars/4224316.html

TEXAS MAN SENTENCED FOR CONSPIRING TO ILLEGALLY EXPORT RADIATION HARDENED INTEGRATED CIRCUITS TO RUSSIA AND CHINA

A US DoJ news release of 24th January reported that Peter Zuccarelli, 62, of Plano, Texas had been sentenced to 46 months in prison for conspiring to smuggle and illegally export from the US in violation of the International Emergency Economic Powers Act (IEEPA), radiation-hardened integrated circuits (RHIC) for use in the space programmes of China and Russia.  Zuccarelli was also sentenced to 3 years supervised release and a $50,000 fine.

https://www.justice.gov/usao-edtx/pr/texas-man-sentenced-conspiring-illegally-export-radiation-hardened-integrated-circuits