30th January 2018
THE CLUBS THAT CONTROL WAR TECH EXPORTS
On 30th January the Indian Express presents a briefing on the international weapons control regimes – asking the question: What are the Missile Technology Control Regime (MTCR), Wassenaar Arrangement and Australia Group? How do these elite regimes control the export of weapons and transfer of weapons technologies? Why does membership in them matter to India? How far is the NSG for India now?
THE MISSING PIECE IN THE WORLD’S NORTH KOREA STRATEGY – COUNTERING PROLIFERATION FINANCING (CPF)
The Diplomat, which concentrates on Asia, carries an article which says that while the US administration and its allies in the region have relied on military deterrence and ratcheting up of sanctions, there is a missing component: a concerted international effort to roll back North Korea’s abuse of the global financial system to aid in the procurement of weapons of mass destruction, which those who study the issue call countering proliferation finance (CPF or CPF). It says that while many states have engaged in transnational financial criminal behavior — money laundering and sanctions evasion — the threat emanating from North Korea is unique; the ability to exploit weak spots in the global financial regulatory and nuclear non-proliferation regimes is unparalleled. CPF, the piece argues, requires additional layers of investigatory sophistication compared to other forms of economic national security tools. Matching account holders against lists of sanctions designations provided by governments, which banks can do in a straightforward way with screening software and existing know-your-customer (KYC) policies, is insufficient. Banks need to be more proactive in recognising activity patterns that are the tell-tale signs of a proliferation network. It says that CFP requires building on the foundation (of investment already made by intelligence agencies, law enforcement, financial regulators, and the private sector (especially banks) in related fields: AML, export control regimes, CFT, and preventing sanctions evasion) with a further level of investment and engagement. A North Korea-focused CFP regime would necessitate banks obtaining granular information about their customers, reporting suspicious financial activity in a prompt way to relevant law enforcement or intelligence authorities, and integrating themselves into information-sharing mechanisms that ensure their access to the most up-to-date warnings about emerging threats.
AUSTRALIA: BID TO FUTURE-PROOF HI-TECH DEFENCE DISCOVERIES
On 30th January, The Australian reports that a parliamentary review of laws stopping sensitive defence equipment from getting into the wrong hands will examine “dual-use” technologies research projects linked to China’s military at Australian universities. The audit is due in April, and follows the decision to boost defence exports. Security and China-focused academics last year called for greater scrutiny of research collaboration projects between Australian universities, Chinese technology companies and Chinese state-owned enterprises.
ISLE OF MAN CRACKS DOWN ON UNLICENSED ACTIVITY
On 29th January, International Adviser reported that the Isle of Man Financial Services Authority is taking a “proactive initiative” to clamp down on financial services professionals conducting regulated activities without a licence. Some of the regulated activities that will be reviewed include: providing or arranging for premises for use as a registered office or accommodation address facilities for a company; acting as a director or secretary of a company; and acting or arranging for another person to act as a nominee shareholder of a company.
POLAND URGES US SANCTIONS ON RUSSIAN PIPELINE
EU Observer on 29th January reports that the Polish PM has urged the US to fine EU energy firms Engie, OMV, Shell, Uniper, and Wintershall taking part in Russia’s plan to build a gas pipeline, called Nord Stream 2, to Germany.
EU AMENDS 1 TUNISIAN SANCTIONS DESIGNATION
On 29th January EU Regulation 2018/137/EU amended the details of Fahd Mohamed Sakher Ben Moncef Ben Mohamed Hfaiez MATERI.
See also Council Decision 2018/141/CFSP.
AU URGES MAURITANIA TO CRACK DOWN ON SLAVERY
Defence Web on 29th January reported that the African Union urged Mauritania to make a greater effort to eliminate slavery after the country handed out lenient sentences to a family of slave owners in a landmark conviction. In Mauritania’s first conviction since its first-ever prosecution for slavery in 2011, the defendant was sentenced to only 2 years in prison while the law required 5 to 10 years, said UK charity Anti-Slavery International.
SUSPECTED BOKO HARAM ATTACKER ARRESTED IN GERMANY
Also on 29th January, Defence Web reported that a 27-year-old Nigerian, Amaechi Fred O, suspected of being a Boko Haram member and killing people in Nigeria during attacks on schools and a village was arrested in Bavaria, Germany according to a federal prosecutor.
US AUTHORITIES CHARGE 3 BANKS, 8 INDIVIDUALS IN FUTURES ‘SPOOFING’ PROBE
On 29th January, Reuters reported that the US DoJ and the country’s derivatives regulator said on Monday they had filed civil and criminal charges against 3 European banks, which paid $46.6 million to settle the cases, and 8 individuals for alleged manipulation in US futures and commodities market. UBS, Deutsche Bank and HSBC and former traders at the banks, as well as individuals at other firms, were charged following a large-scale multi-agency probe including the Commodity Futures Trading Commission (CFTC) into “spoofing” in metals and equities futures.
NEW CHARITY LAW BUILDING ON STRONG FOUNDATIONS IN JERSEY
On 26th January, Ogier published an article saying that Jersey is gearing up to become a worldwide centre of excellence for charity and philanthropy when the final phase of its new charities law comes into force in May – and the number of foundations registered is already rising in anticipation; seeing a 9% rise in the number of foundations last year, adding 30 new ones.
THE CAYMAN ISLANDS NON-PROFIT ORGANISATION LAW: KEY CONSIDERATIONS FOR CHARITIES
Another article from Ogier, on 25th January, says that the Cayman Islands recently implemented legislation, the Non-Profit Organisations Law 2016, which will have serious implications for charities operating in the Islands. It is part of the implementation of FATF recommendations to facilitate AML/CFT investigation and enforcement and will also give the public access to certain information about charities through the establishment of a new register, the Non-Profit Organisations Register.
DETAILS EMERGE OF PARADISE PAPERS FIRM’S ACTION AGAINST MEDIA
The Law Society Gazette reveals some details of the legal action being taken against the BBC and Guardian.
CHINA’S RESTRICTIONS ON FOREIGN WASTE IMPORTS EXPLORED
The House of Commons Environmental Audit Committee on 30th January examines the scale and impact of the ban, including its potential to result in more landfill and incineration. The session will also explore what the Government could do to ensure waste is managed sustainably.
Meanwhile, on 29th January website Loadstar reported that container shipping lines could lose around 5m TEU of cargo a year following the recent import ban on a wide variety of waste materials for recycling, according to new research from Drewry Maritime Advisors.
FRAUD PROFESSIONALS STRUGGLE TO BALANCE FRAUD PREVENTION WITH WIDER BUSINESS PRIORITIES
Reporting on the Fraud and Risk Report 2017 – ‘Smarter future of fraud prevention’ which surveyed over 100 fraud professionals, London Loves Business reports that 62% of fraud managers are under pressure to increase transactions and customer sign-ups by reducing risk thresholds for ID verification, according to Callcredit Information Group’s research; and that 64% of respondents feel it is difficult to balance the business need to on-board and service customers quickly with the need to go through identity verification processes.
HMRC CLARIFIES TAX TREATMENT OF CRYPTOCURRENCIES
On 30th January, CCH Daily reports that although there are no plans afoot to update HMRC’s tax treatment of cryptocurrencies such as Bitcoin, HMRC has moved to clarify its position on the virtual currencies.
CHINA UNVEILS ‘POLAR SILK ROAD’ PLANS
Lloyds Loading List reports that China has revealed plans to extend its ambitious ‘Belt and Road’ initiative by developing a ‘Polar Silk Road’ via the Arctic, developing shipping lanes that are being opened up by global warming.
SPOTLIGHT ON HONG KONG
In the latest TRACE podcast, Wendy Wysong of Clifford Chance describes the aspects of Hong Kong’s anti-bribery law and enforcement regime that set it apart from most others.
WITHDRAWAL OF THE UK FROM THE EU – EU RULES IN THE FIELD OF IMPORT/EXPORT LICENCES FOR CERTAIN GOODS
Baker McKenzie has reported that, on 25th January, the European Commission posted a 4-page Notice which points out that unless a ratified withdrawal agreement establishes another date, all EU primary and secondary law will cease to apply to the UK from 30th March 2019, 00:00h (CET). The UK will then become a ‘third country’.
The Notice – WITHDRAWAL OF THE UNITED KINGDOM AND EU RULES IN THE FIELD OF IMPORT/EXPORT LICENCES FOR CERTAIN GOODS is available at –
The types of goods it lists include: waste, ozone-depleting materials, hazardous chemicals, GMO, mercury, endangered species, cultural goods, rough diamonds, dual-use goods, firearms and ammunition, military technology and weapons, torture and capital punishment equipment.
SOUTH-EAST ASIAN STATES LAUNCH INTELLIGENCE PACT TO COUNTER ISLAMIST THREAT
On 25th January, Reuters reported that 6 SE Asian nations launched an intelligence pact aimed at combating Islamist militants and improving co-operation on security threats, overcoming what analysts described as a high level of distrust. Under the “Our Eyes” initiative, senior defence officials will meet every 2 weeks to swap information on militant groups and develop a common database of violent extremists. The intelligence sharing arrangement comes after insurgents aligned to Islamic State laid siege to the southern Philippine city of Marawi last year, with many foreigners were found among the militants involved. The countries involved in the pact are Malaysia, Singapore, Indonesia, Brunei, Philippines and Thailand.
AMENDMENTS TO THE UK SANCTIONS AND ANTI-MONEY LAUNDERING BILL
Mishcon de Reya on 29th January reported on amendments made to the Sanctions and AML Bill as it begins its Report Stage in the House of Lords. The amendments may initially seem uncontentious but if implemented, would result in a significant widening of the UK’s power to make unilateral sanctions.
COMPLIANCE OFFICERS FACE BURGEONING SANCTIONS THREAT
On 29th January, the chartered secretaries’ body in the UK, ICSA, published an article which starts by saying that one of the biggest problems compliance professionals face is keeping abreast of new regulations. It has featured as a top priority every year that ICSA’s ’Compliance Horizon’ survey, and is especially difficult in the field of sanctions. This year, it says, close to 45% of compliance professionals voted international sanctions as the single biggest external risk to their business. The article comments on the differing requirements imposed by various different countries and supranational bodies that do not necessarily align, ad this creates tension for companies operating internationally. As well as dealing in more depth with Russian and Iran and the challenges they present, the article also says that the other piece of the puzzle is for companies to understand exactly who they are doing business with – knowing who key principals are, and who ultimately controls the company. The article admits that identifying the controlling shareholders is not always easy, but it is vital to ensure that sanctioned individuals are not directly or indirectly benefiting financially from the business.
NEW OFAC FAQ ON LIST OF RUSSIAN PERSONS/ENTITIES THAT MIGHT BE MADE SUBJECT TO SANCTIONS
On 30th January the US Treasury announced that OFAC had published a new FAQ regarding the Treasury report on oligarchs and parastatal entities of the Russian Federation as required by section 241 of the Counter America’s Adversaries Through Sanctions Act (CAATSA). Issued on 29th January, this list was of persons and entities that could be liable to sanctions under the Act. The new question was –
Has the Treasury Department now sanctioned the individuals and entities included in its January 29, 2018 report on senior political figures, oligarchs, and parastatal entities of the Russian Federation?
The response is –
No. Pursuant to section 241 of Countering America’s Adversaries Through Sanctions Act of 2017 (Pub. L. 115-44), the Treasury Department, in consultation with Secretary of State and the Director of National Intelligence, delivered a report on January 29, 2018 to the specified congressional committees regarding significant senior political figures and oligarchs in the Russian Federation and Russian parastatal entities.
This report is not a “sanctions list.” While some persons mentioned in the report may have been sanctioned pursuant to other authorities, the inclusion of individuals or entities in this report, its appendices, or its classified annex does not and in no way should be interpreted to impose sanctions on those individuals or entities. Inclusion in this report also does not constitute a determination by any agency that any of those individuals or entities meet the criteria for designation under any sanctions program. Moreover, the inclusion of individuals or entities in this report, its appendices, or its classified annex does not, in and of itself, imply, give rise to, or create any restrictions, prohibitions, or limitations on dealings with such persons by either US or foreign persons. Neither does inclusion in the unclassified report indicate that the US Government has information about the individual’s involvement in malign activities. [1-30-2018]
The US Treasury news release from 29th January about the listing (included as part of 5 reports due under the Act) is at –
The lists include names 114 senior Russian political figures and 96 “oligarchs” who US authorities say have gained wealth or power through association with Putin, including aluminum magnate Oleg Deripaska, Chelsea football club owner Roman Abramovich and the media and tech magnate Alisher Usmanov.
See also –
The list is at –
HOME OFFICE RESPONSES TO BORDERS & IMMIGRATION INSPECTIONS
On 30th January, the Home Office published 3 responses to reports by the Chief Inspector of Borders and Immigration in the UK –
Response to an inspection report on the review and removal of immigration, refugee and citizenship status
Response to an inspection report on the Home Office’s production and use of country of origin information
MORE THAN $70 MILLION IN COCAINE SEIZED FROM PRIVATE JET IN UK
KCBD, among others, on 30th January reported that 5 men were arrested after an estimated $70.68 million worth of cocaine was seized from a private jet at Farnborough Airport. Border Force officers confiscated the approximately half a ton of cocaine found on the jet, according to the NCA. The plane had departed from Bogota, Colombia. The men, 2 British, 2 Spanish and 1 Italian, were arrested on suspicion of importing the drugs.
US SANCTIONS LAOS-BASED ‘CRIMINAL ORGANISATION’
Bangkok Post on 31st January announced that the US Treasury imposed sanctions against 4 men and a group of companies (the “Zhao Wei network”) allegedly linked to drug and human trafficking throughout SE Asia. OFAC said the sanctions revolved around a group based in Hong Kong and Chiang Saen district of Chiang Rai, the Kings Romans Company, a casino operator. The company operates a well-known casino in Laos and has operations in Hong Kong, Laos, Myanmar and China, as well as Thailand, according to the sanctions list. The Kings Romans Casino is a hotel and gambling site in Laos, clearly visible from the Thailand side of the Mekong River at the Golden Triangle. Owned by Hong Kong-based Kings Romans Group, the casino claims to cater mostly to Chinese tourists. The 4 men are –
- Abbas “Basu” Eberahim, 29, Australian;
- Thai national Nat Rungtawankhiri aka Rungtawankeeree, aged 41, Thai national;
- Guiqin Su aka Zhao Su or Madame Su, 69, a Hong Kong resident with Chinese nationality (and the wife of Zhao Wei below); and
- Zhao Wei aka Chio Wei aka Thanchai Saechou, 66, a dual Chinese-Macau national.
SEC HALTS INITIAL COIN OFFERING FOR FRAUD INVOLVING ‘DECENTRALIZED BANK’ ENDORSED BY BOXING LEGEND
On 30th January, CCN.com reported that The US SEC filed charges against another initial coin offering (ICO), arguing that AriseBank not only violated securities regulations but also made false statements to investors. The charges, which the SEC filed against the Texas-based AriseBank on january 25th, allege that the firm and its co-founders, Jared Rice Sr. and Stanley Ford, sold unregistered securities and engaged in “fraudulent conduct” to market its “decentralized bank”. AriseBank ICO had been endorsed by boxing legend Evander Holyfield.
US SEEN AS WORLD’S SECOND-BIGGEST TAX HAVEN
Fin24 reports that the US is the world’s second-largest tax haven, behind Switzerland and just ahead of the Cayman Islands, according the Financial Secrecy Index, an assessment of global financial centres compiled by the Tax Justice Network, an advocacy group, bumped up the US from its No. 3 spot in 2015 – the last time the study was conducted – following its increased share of the global market for offshore financial services. The US is now said to account for about 22% of the global market in offshore services, up from 14%, according to the report.
For the Index see –
UK MAKES AMENDMENTS TO 1 NAME ON TUNISIAN SANCTIONS LIST
On 30th January, HM Treasury issued a Notice notifying changes to the details of a person designated under its Tunisian sanctions: Fahd Materi, as made by EU Regulation 2018/137/EU.
THE LIMITATIONS ON CASH PAYMENT LIMITATION
On 30th January, the World Bank Blog carried an article by Nikos Passas of the Northeastern University School of Criminology and Criminal Justice in Boston, and concerned with the imposition of limits on the use of cash for payment in substantial sums. It begins by reminding one that in March 2017, the European Commission announced a public consultation about a possible introduction of cash payment limitations (CPL). This was because “payments in cash are widely used in the financing of terrorist activities” we should explore “the relevance of potential upper limits to cash payments”. It said it has also been argued that a “cashless” or “less cash” society would be good for convenience and facilitation of payments, shorter remittance timelines and better management of monetary and tax policies. The blog says that there are serious doubts that CPL would advance substantially the worthy cause of controlling serious crimes, and whilst cash can and is used by criminals and terrorists, so too are barter and no-cash deals. CPL may bring about higher transaction costs, undermined privacy, weakened trust to institutions, basic rights violations, bank-runs and bail-in regulations that place citizens’ savings at risk of devastating losses. It might also badly affect those who rely on remittances. The challenges presented challenges will affect the most vulnerable parts of the population (elderly, migrants, unbanked, remittance recipients etc.). A detailed paper on the matter is available –
ITALIAN POLICE MAKE 20 INTERNATIONAL MONEY LAUNDERING ARRESTS
On 30th January, ANSA in Italy reported that Italian police had arrested 20 people on suspicion of international money laundering. Police were said to have busted 2 alleged gangs, one headed by 2 Roman businessmen, accused of laundering €15 million from the Chinese community in the province of Milan; and one that allegedly laundered €3 million in proceeds from Rome drug trafficking.
‘YACHT OF STALIN’ TO BE AUCTIONED IN RUSSIA
Superyacht News reports that one of Russia’s oldest and rarest yachts, allegedly owned by Joseph Stalin, is available to buy. The “Maxim Gorky” is an 84 year old steamship.
REPORT URGES GREECE TO RETAIN 35% ONLINE GAMBLING TAX
Calvin Ayre reports that a new government-commissioned study has suggested Greece stick with its controversial plan to impose a 35% tax on online gambling revenue.
UK RENEWS DESIGNATION OF HIZBALLAH MILITARY WING
On 29th January, HM Treasury announced that it had renewed the designation of the Hizballah Military Wing under the Terrorist Asset-Freezing etc. Act 2010.
The Isle of Man followed suit –
A £1 MILLION FINE FOR BROKER SHOWS POTENTIAL SHORTCOMINGS WITH GROUP-WIDE CONTROLS AND SURVEILLANCE FOR SUSPICIOUS TRANSACTIONS
A briefing from law site, Out-Law, on 30th January contends that a fine served on an online broker shows that financial firms should not rely solely on group-wide controls and surveillance systems to pick up on suspicious transactions. The briefing is concerned with the FCA fine for London-based Interactive Brokers (UK) Limited (IBUK) for “poor market abuse controls and failure to report suspicious client transactions”.
SHOULD ISP BEAR COSTS OF BLOCKING WEBSITES THAT FACILITATE THE SALE OF FAKE GOODS?
Another briefing from Out-Law on 30th January involves a case before the UK Supreme Court which is set to provide guidance on whether and to what extent internet service providers (ISP) will be expected to pick up the cost of blocking customers’ access to websites that facilitate the sale of fake goods.
TAKING CONTROL OF AIRCRAFT UNDER A HIGH COURT WRIT
An article by the Sheriff’s Office in the UK provides an insight into the process of seizing aircraft and the steps that need to be taken and pitfalls avoided.
GERMAN AUTHORITIES CARRY OUT MASSIVE RAID TARGETING ILLEGAL WORK RACKET
On 30th January, Deutsche Welle reported that raids across the state of North Rhine-Westphalia have broken up an organised crime network involved in illegal employment at construction sites. Hundreds of construction companies are believed to be involved. They detained a total of 8 people — 6 men and 2 women — who are believed to be the main suspects in the illegal work ring. Prosecutors said the suspects used the network of companies to help construction companies evade paying taxes and social security contributions on a massive scale. Around 450 construction companies are believed to have used the network’s services. Using their sham firms, the crime network would issue bills to the construction companies for work that never took place. The construction companies would pay the bills and then receive their money back in cash from the crime network — after the suspects took out a 10% cut from the money, and it is believed to have helped companies evade some €35 million in taxes and social security payments.
HATTON GARDEN GANG LEADERS MUST REPAY £27 MILLION
KYC 360 reports on 30th January that the ring leaders of a raid branded the “largest burglary in England” have reportedly been ordered to pay the state a total of £27.5 million from their available assets or face more years behind bars. The gang of elderly men drilled a hole to access a vault at Hatton Garden Safe Deposit in Easter 2015, and are understood to have benefited from millions of pounds worth of stolen gold, gems and cash. Police are estimated to have recovered around £4 million worth so far.
ISLE OF MAN RENEWS DESIGNATION OF ETA
On 29th January the Isle of Man Treasury also confirmed renewal of the designation of ETA under its terrorism sanctions law –