29th January 2018
JAPAN PUNISHES COINCHECK AFTER $530 MILLION CRYPTOCURRENCY THEFT
Reuters on 29th January reported that Japan’s financial regulator had ordered Tokyo-based Coincheck to improve processes after hackers stole $530 million worth of digital money from its exchange, jolting the nation’s cryptocurrency market in one of the biggest cyber heists.
Coincheck hack: World’s biggest-ever digital currency ‘theft’
SCOTS LAW GIANT, BURNESS PAULL, “LINK TO HUNDREDS OF SECRETIVE SHELL FIRMS”
The Herald in Scotland on 29th January carried an exclusive report linking hundreds of shell companies that had flouted AML laws to one of Scotland’s largest law firms. The Scottish limited partnerships or SLP – all legitimate investment vehicles formally headquartered at the Edinburgh offices of law firm Burness Paull – have failed to meet key transparency rules on beneficial ownership.
GARDAÍ GET SOFTWARE TO SPEED UP FIGHT ON FRAUD
The Irish Independent reports on 29th January that Gardaí have installed new IT software to help them deal more speedily with thousands of reports of suspicious financial transactions. The move is one of a series of measures taken in response to a review carried out by FATF into Ireland’s AML/CFT systems. The article claims that it is already being hailed as a valuable asset by the FIU, which is based within the Garda’s National Economic Crime Bureau.
US ASKS SOUTH KOREA TO REPORT ON AML STATUS OF DIGITAL CURRENCY TRANSACTIONS IN BANKS
Business Korea on 29th January reports that the New York State Department of Financial Services (DFS) asked 6 South Korean banks and their New York branches to report on the current conditions of digital currency transactions in South Korea and their measures to prevent money laundering. The reports says that it is very rare for the US to make a request for business in South Korean branches., but the US seems to be concerned that virtual currency can be a loophole in financial sanctions on North Korea. The article claims that the US request involves banks including Woori Bank, Industrial Bank of Korea (IBK), Shinhan Bank, KB Kookmin Bank, NH Nonghyup Bank and Korea Development Bank (KDB), and reports on the current situation of cryptocurrency transactions in their main offices and the result of on-site inspections conducted by the Financial Supervisory Service (FSS) and the Financial Intelligence Unit (FIU) to check whether they have fulfilled their AML obligations.
SOUTH AFRICA: DENIALS THAT MINISTER AND GUPTAS TO BE CHARGED
Times Live in South Africa reports on 29th January that the National Prosecuting Authority has rubbished a report that Mineral Resources Minister Mosebenzi Zwane‚ 3 Gupta brothers and their associates are to be charged with money laundering‚ among other charges‚ in the next few weeks. The Sunday Times reported that the case would become the first state capture to be prosecuted, with Zwane for his alleged role in a sophisticated and elaborate scheme that allegedly siphoned off money meant to benefit poor farmers
“CUCKOO SMURFING” AND CROOKED BANKERS – HOW HIGH-LEVEL CRIMINALS HIDE THEIR CASH
Following the recent convictions in Merseyside, the Liverpool runs a story detailing how the money was laundered; including “cuckoo smurfing”, also known as third-party payments, which relies on a crooked insider in the banking or money transfer system with access to the bank details of innocent businesses or individuals. These details are then passed on to criminals with a need to pay for drugs or other services overseas.
BITCOIN AND THE DARK WEB: THE NEW TERRORIST THREAT?
The Georgetown Security Studies Review at Georgetown University on 21st January reflects on the fact that there is a slow realisation by governments, banks, and the public that the cryptocurrency could be used for the purposes of terrorism. Indeed, is says, the links between terrorism and organised crime have been well-documented, and including the replacement of traditional hawala. However, it says, the connection between terrorism and Bitcoin is contested and remains a relatively unknown area of both awareness and research.
INDONESIA’S WAR ON TERROR IS FAR FROM OVER
On 8th January the Georgetown Security Studies Review at Georgetown University reports that amid recent concerns about the terrorist attacks in 2016 and the spread of extremism, Indonesian President Joko Widodo ramped up security measures in Indonesia. Yet, despite Indonesia’s success countering extremism and thwarting terrorist threats over the past 2 decades, the return of foreign jihadists and homegrown radicalisation pose a long term threat to stability in Indonesia and the region. Over the past 20 years, Indonesia has experienced a series of terrorist attacks, with al-Qaeda affiliate Jemaah Islamiya (JI). Since 2014 several militant groups in the region pledged allegiance to the Islamic State (IS), such as East Indonesia Mujahidin (MIT), and there has been a rise in the number of homegrown and radicalised individuals in Indonesia. Since 2011, IS’s supporters who could not join the group in Iraq or Syria began to attack a wide range of targets in Indonesia.
THE OTHERS: FOREIGN FIGHTERS IN LIBYA
In its Policy Notes #45, the Washington Institute claims to offer a deeper understanding of the foreign-fighter phenomenon, its evolution, and its potential trajectories. It points out that over the past 7 years of revolution and civil war, Libya has experienced a massive influx of foreign fighters. The study breaks down the components of the Libyan jihad, including country-by-country statistics on fighters, meticulously traces the routes taken by jihad aspirants from various African points of origin to Libya. In thus offering a deeper understanding of the foreign-fighter phenomenon, its evolution, and its potential trajectories, this study is said to provide invaluable insights for mitigating related problems in Africa and Europe in the years ahead.
REPORT – THE CRIME-TERROR NEXUS IN THE UK AND IRELAND
A new report from the Crime Terror Nexus project which has as its aim documenting links between crime and terrorism across the EU; and is a project of Panta Rhei Research Ltd. It is funded by PMI IMPACT, a global grant initiative of Philip Morris International that supports projects against illegal trade. The objective of this paper is to present an overview of links between crime and terrorism (the crime-terror nexus) in the UK and Ireland, highlight potential risks, and make a series of recommendations for how such risks can be mitigated. It concludes that it seems clear that organised crime in Britain and Ireland has become a multi-faceted, entrenched and dynamic phenomenon, and that the threat from terrorism – be it jihadist, far-right, or Northern Ireland related – will preoccupy security agencies in both countries for years to come. It says that, though illicit activities are notoriously difficult to measure, it says it has found evidence for links between crime and terrorism in 3 areas:
- Among paramilitary groups in Northern Ireland, which have been deeply involved in organised crime in Northern Ireland and across the border;
- In British prisons where criminal and terrorist milieus have connected and cross-fertilised; and
- Among British jihadists whose criminal skills may be used for terrorist purposes.
Recommendations include action on prisons, terrorist financing, better data collection, information sharing and collaboration between security agencies as well as between government and non-government actors. But, in the light of Brexit, the most urgent area of action is with regards to Northern Ireland, and the “harder” the border, the greater the pay-offs for organised crime.
BILLIONAIRE SINGH BROTHERS FROM INDIA ACCUSED BY NEW YORK INVESTOR OF SIPHONING CASH
On 29th January, Bloomberg reported that India’s billionaire Singh brothers, Malvinder and Shivinder, already embroiled in one international legal battle over alleged fraud, are being accused of “diversion, siphoning and digression of assets” by a New York-based investor in a lawsuit filed in the High Court of Delhi that alleges that the Singhs’ Religare Enterprises Ltd diverted the lender’s funds to aid them with a personal debt load of about $1.6 billion, which is forcing the sale of chunks of their empire.
TERROR LAWS ‘DON’T ALWAYS PROVIDE THE RIGHT ANSWER’, UK WATCHDOG SAYS
The Law Society Gazette on 29th January reported that barrister Max Hill QC has said in his first annual report as the independent reviewer of terrorism legislation that some terrorist crimes are best described by common law offences rather than by bespoke legislation,. However, Hill, the head of Red Lion Chambers in London, declined to make ‘firm recommendations’ on what rarely-used terror laws should be scrapped.
See the report at –
UK GOVERNMENT ACTS TO PROTECT ESSENTIAL SERVICES FROM CYBER ATTACK
On 28th January a news release advised that Britain’s most critical industries are being warned to boost cyber security or face hefty fines. It says that following a consultation bosses of Britain’s most critical industries are being warned to boost cyber security or face hefty fines for leaving themselves vulnerable to attack. Energy, transport, water and health firms could be fined up to £17 million if they fail to have the most robust safeguards in place against cyber attack, and new regulators will be able to assess critical industries to make sure plans are as robust as possible. What is described as a simple, straightforward reporting system will be set up to make it easy to report cyber breaches and IT failures so they can be quickly identified and acted upon.
See also response to consultation on the Security of Network and Information Systems Directive –
AUSTRALIA UNVEILS PLAN TO BECOME ONE OF WORLD’S TOP 10 ARMS EXPORTERS
On 29th January, Customs Today carried a piece arguing that Australia is set to become one of the world’s largest arms exporters under a controversial Turnbull government plan. The prime minister has unveiled a new defence export strategy setting out the policy and strategy to make Australia one of the world’s top 10 weapons exporters within the next decade. Hailed as a job-creating plan for local manufacturers, Australia only sells about $1.5 billion to $2.5 billion in “defence exports” a year and it wants the value of those exports to increase significantly.
ANNUAL INDEPENDENT FISCAL POLICY REVIEW PUBLISHED
On 26th January the States of Guernsey reported that the island continues to exhibit tight control of its budgets, according to the authors of the Annual Independent Fiscal Policy Review 2017.
UK HEMORRHAGING HIGH NET WORTH INDIVIDUALS
On 25th January International Adviser reported that 4 times as many high net worth individuals left the UK in 2017 than arrived, according to research from Johannesburg-based New World Wealth (NWW). The researchers estimated that although around 1,000 high net worth individuals (HNWIs) came into the UK during the year, this was more than cancelled out by the 5,000 who left, resulting in a net outflow of around 4,000 for the year.
US POSTAL SERVICE MUST TAKE OPIOIDS AT LEAST AS SERIOUSLY AS COUNTERFEIT PURSES
WKSU in the US reported that a report released by the Senate Permanent Subcommittee on Investigations tracked online purchases of fentanyl and carfentanil by 300 buyers in 43 states – with Ohio, Pennsylvania and Florida making the most purchases. Senator Bob Portman hammered on witnesses from the US Postal Service and State Department, who have been resisting his push to require electronic shipping information on international parcels, saying they seem to regard it as less important than tracking counterfeit purses, despite Fentanyl sellers in China operate openly on the Internet, their preferred method of shipping is the U.S. Postal Service.
Something for motorbike nuts in the Isle of Man perhaps – on 29th January Think Defence carries an article asking that, where quad bikes are focused on load hauling, motorcycles tend to a focus on speed. The military motorcycle has generally lost favour in most western forces but is it time to have another look? This recent article from Sputnik News describes the value of motorcycles in the close urban terrain of Salma in Syria. Interesting photos, videos and comments.
And also –
MILITARY QUAD BIKES HISTORY ETC
ISLE OF MAN LIBYA SANCTIONS: DETAILS OF SHIP “CAPRICORN” UPDATED
On 29th January, the Isle of Man issued a news release notifying the recent updating of information on the vessel “Capricorn”, which is subject to the Libyan sanctions regime.
PEPSICO CONCEDES RELATIONSHIP WITH INDONESIA FIRM ACCUSED OF RIGHTS ABUSES
On 26th January, Corporate Counsel carried this story, with the company saying in a statement it was “very concerned about the allegations that our policies and commitments on palm oil, forestry stewardship and human rights are not being met”. PepsiCo’s statement acknowledged that IndoAgri, a company RAN and other human rights groups have accused of ongoing labor abuses and harmful deforestation in Indonesia, is a subsidiary of food manufacturer Indofood. PepsiCo has a joint venture with IndoFood to make snacks in Indonesia under the Lay’s brand.
ICELAND REMOVES EXCHANGE CONTROL CAP
Baker McKenzie reports that Iceland has removed the remaining exchange control cap that affected the ability of individuals in Iceland to acquire shares of US and other non-Icelandic companies. Despite relaxation of the rules in November 2016, a cap of ISK 100 million (c. £705,000) remained but its Parliament recently eliminated the cap.
MALTA: NEW VAT RULES FOR THE GAMING SECTOR
On 26th January, WH Partners reported on new VAT guidelines w.e.f. 1st January and gaming services which are not included in the list in the guidelines are considered as ‘taxable supplies’ and no longer ‘exempt without credit’ supplies.
THE UK AUTOMATIC LICENCE VERIFICATION SYSTEM (ALVS)
On 29th January HMRC issued updated guidance on how to import regulated horticultural, plants, live animals and animal products using the automatic, multi-agency approval system.
COUNCIL OF EUROPE REPORT ON HUMAN TRAFFICKING IN SERBIA
The Council of Europe’s Group of Experts on Action Against Trafficking in Human Beings (GRETA) has published a report on Serbia which assesses developments since the last assessment report in 2014. It says that Serbia has evolved, but efforts should be stepped up to reduce children’s vulnerability to trafficking and improve the identification of and assistance to child victims.
MAKING FAKE MEDICINES A CRIMINAL OFFENCE THROUGHOUT EU
On 29th January, EurActiv reported on the introduction by 21 EU countries of laws making falsifying medicines a criminal offence, carrying a potential jail sentence of up to 15 years, according. Maximum prison sentences for the falsification of medicines range from 1 year in Sweden, Finland and Greece to 15 years in Austria, Slovenia and Slovakia. Meanwhile, maximum fines range from €4,300 in Lithuania to €1 million in Spain and ‘unlimited’ in the UK.
UK GUIDANCE ON BUSINESS RISKS IN NIGERIA
On the 29th January, the UK Department for International trade published updated information on key security and political risks which UK businesses may face when operating in Nigeria; it looks at the intellectual property, organised crime, human rights, bribery and corruption and terrorism risks that UK businesses may face when operating in Nigeria.
It is part of a collection of such guides –
BAGHDAD LIFTS SANCTIONS ON KURDISTAN’S BANKS, SENDS PUBLIC EMPLOYEES SALARIES
Kurdistan 24 in Iraq reports that Iraq authorities said they would lift the punitive measures imposed on banks in the Kurdistan Region amid reports that Baghdad was sending a significant amount of money to cover employee salaries. In October 2017, the Iraqi central bank, upon the request of the Parliament, imposed financial restrictions — including the suspension of dollar exchange —on 4 major Kurdish banks but allowed other financial institutions to continue their foreign currency transfers.
PAYMENT FRAUD STILL ON THE RISE AND SME ARE MOST AT RISK, SAYS UK SURVEY
On 29th January Forbes reported that new research carried out by payment systems company VocaLink – published as The Small Business Fraud Report – focuses on the fraud perceptions and experiences of UK SME.
STRUCK-OFF IRISH SOLICITOR WANTS TIME SPENT IN BRAZILIAN PRISON TAKEN INTO ACCOUNT IN MORTGAGE FRAUD CASE
The Irish Independent on 29th January reported that fugitive struck-off solicitor Michael Lynn wants the Irish High Court to determine whether the DPP is entitled to guarantee that time he served in a Brazilian prison while fighting his extradition to Ireland will be taken into account should he be convicted of fraud charges. He faces 33 charges relating to alleged mortgage fraud of some €80m and has been imprisoned since 2013 when Brazilian federal police, acting on behalf of Interpol, arrested him.
SCRAP METAL FIRM BOSS KEPT £200,000 IN VAT FRAUD SCHEME
STV reports that a scrap metal dealer who kept more than £200,000 worth of VAT charges instead of paying it to HMRC has been jailed. Russell Goodenough, 48, set up T’ir Trading Ltd in Aberdeenshire, in December 2010. The company bought and sold scrap metal and was registered for VAT, and he imported tonnes of scrap metal from Europe which he sold on to customers in the UK charging VAT.
US TEAM FOR COMBATING HEZBOLLAH FINANCED NARCOTICS FORMED
In an editorial the VoA reports that in January, the US Attorney General announced the creation of the Hezbollah Financing and Narcoterrorism Team (HFNT), a group of experienced international narcotics trafficking, terrorism, organised crime, and money laundering prosecutors. It is tasked with investigating individuals and networks providing support to Hezbollah, and pursuing prosecutions in any appropriate cases. The HFNT will begin by assessing the evidence in existing investigations, including cases stemming from Project Cassandra, a law enforcement initiative targeting Hezbollah’s drug trafficking and related operations.
UK NOTICE TO EXPORTERS 2018/02: GUIDANCE ON COMPLETING MOD FORM 680 APPLICATIONS
On 29th January the UK Export Control Joint Unit published a new Notice to Exporters about the the MOD Form 680, the process which the UK Government uses to enable UK Industry to apply for permission to release information about classified goods and services to foreign nations, while at the same time maintaining national security. Applications are assessed by a community of advisors including specialists within the Ministry of Defence, Foreign and Commonwealth Office and other government departments.
CHARITY COMMISSION INQUIRY INTO PEACETRAIL CHARITY
On 29th January the Charity Commission published the outcome of its inquiry into allegations of mismanagement etc into Peacetrail, a Charitable Incorporated Organisation which was removed from the register of charities in October 2017. The charity’s work included operating in a high risk area (the Occupied Palestinian Territories). The inquiry concluded that the trustees had been responsible for misconduct and/or mismanagement in the administration of the charity throughout their periods of trusteeship, primarily through their lack of oversight over the charity’s CEO and failure to fulfil their basic legal duties, including obtaining evidence of end use of charitable funds and failing to file the charity’s statutory returns within the statutory timeframe. The inquiry also found that the CEO was responsible for misconduct and/or mismanagement in the administration of the charity as he failed to ensure proper financial controls were in place and to address governance issues when the two trustees had attempted to resign.
PUBLIC CAN CHALLENGE 9 MORE LENIENT TERROR SENTENCES IN UK
The MoJ has issued a news release announcing that from 29th January, 9 further terror-related offences will fall within the scheme which allows the public to challenge sentences handed out by the courts.
UPDATE ON THE ITALIAN COMMERCIAL EXEMPTION FROM VAT
Superyacht News on 29th January reported that the Italian Taxation Authority has recently published an update that concerns yachts seeking commercial exemption from VAT.
CHINA PLANNING GAMBLING CRACKDOWN
On 29th January, Calvin Ayre reported that China will welcome the Year of the Dog with a renewed assault on illegal gambling activity, as well as the support services that enable this activity to thrive. The website reports that a Ministry of Public Security deputy minister told attendees at a national video conference that the country faced a new front in its ongoing war against illegal gambling activity, with rural areas of the country coming under fresh attack from illegal gambling operators, including from unauthorised online gambling sites.