1st February 2018
NORTH KOREA’S SOLID-PROPELLANT ROCKET ENGINE PRODUCTION INFRASTRUCTURE: THE NO. 17 FACTORY IN HAMHUNG
For an example of the chiefly open source research being carried out on North Korea, and the analysis of its capabilities and activities, this article on the 38 North website is a good example. It is concerned with the No. 17 Explosives Factory and its branch factories near Hamhung which have been identified as being the most probable site for the manufacture of the latest large solid-propellant rocket engines.
NEW PALESTINIAN AND EGYPTIAN DESIGNATIONS BY US HIGHLIGHT IRAN AND THE MUSLIM BROTHERHOOD
An article from the Washington Institute on 31st January follows the recent new OFAC counter-terrorism designations. It points out that the US had emphasised links to Iran, and Secretary of State Rex Tillerson had emphasised that both Hamas and al-Sabirin (a Gaza-based organisation, which reportedly receives $10 million a year from Iran) are “sponsored and directed by Iran” and continue to attempt attacks at its behest. One person designated, Haniyeh, was said to have led efforts to improve ties with Iran during his tenure as Hamas leader in Gaza. Also, other designations are said to be of those linked or inspired by the Muslim Brotherhood of Egypt. The article concludes the limited effect of seeking to freeze assets of those unlikely to have any assets within reach of the US authorities means that the actions are therefore more symbolic in nature, aimed at shoring up key regional allies who share Washington’s concerns about Iranian terror sponsorship and Brotherhood-inspired violence.
EU LAUNCHES BLOCKCHAIN OBSERVATORY AND FORUM
On 1st February Monde Visione reported that the European Commission launched the EU Blockchain Observatory and Forum with the support of the European Parliament. The Blockchain Observatory and Forum will highlight key developments of the blockchain technology, promote European actors and reinforce European engagement with multiple stakeholders involved in blockchain activities. The Commission wants to provide more visibility to blockchain actors and build on existing initiatives, consolidate expertise and address the challenges created by the new paradigms enabled by blockchain, such as supporting the European Industry, improve business processes and enable new business models. The Blockchain Observatory and Forum was created as a European Parliament pilot project and is intended to support the Commission’s work of FinTech.
See also factsheet –
ISIS SMUGGLED $400 MILLION OUT OF IRAQ AND SYRIA DURING ITS RETREAT
In an article on 17th January, in which it was said that despite its defeat on the battlefield, ISIS is using Iraq’s black market to stockpile millions of dollars to fuel its coming insurgency, it was reported that ISIS had smuggled an estimated $400 million out of Iraq and Syria during its recent retreat, according to an Iraqi legislator who sits on a parliamentary committee to gather facts on Mosul’s fall and who is close to figures in the organization. With that cash, ISIS has both smuggled money out of Iraq and invested in local Iraqi markets.
UKRAINE TESTS CRUISE MISSILE
The Missile Threat website on 1st February reported that, on January 30th, Ukraine flight-tested an indigenously-produced, ground-launched cruise missile. One source has identified the missile as the Neptune, a Ukrainian advanced subsonic cruise missile based on the Kh-35, a Soviet-designed subsonic antiship missile put into service in Russia in 2003. The missile was developed by the Kiev-based Luch Design Bureau.
THE STORY OF ICTY: LEGAL SUCCESS EMERGING FROM TRAGEDY
A guest columnist on the Jurist website provided this article dated 16th January which deals with the International Criminal Tribunal for the former Yugoslavia (ICTY), established in response to a mandate from the UN Security Council. The ICTY officially closed on 21st December, having originally been set up in response to atrocities committed in former Yugoslavia. It operated for 10,800 days, examined more than 4,000 witnesses and convicted 90 individuals.
“BETTING KING” WITH ALLEGED LINKS TO MALTA ARRESTED IN RAIDS IN ITALY
Calvin Ayre on 1st February reported that Italian police have busted an illegal gambling operation with ties to Malta-licensed online betting sites. It says that an operation saw over 200 police in the Palermo region descend upon dozens of betting shops in an anti-mafia operation dubbed Game Over. The raids resulted in the arrests of 23 individuals, including Benedetto Bacchi (pictured), the so-called ‘betting king’ who reportedly controlled a network of around 700 betting shops across Italy. The betting agencies in question are known in Italy as data transmission centers (CTD), essentially internet cafés with terminals connected to internationally licensed online gambling sites. It says that Italian prosecutors linked Bacchi and his B2875 gambling brand – the numbers correspond to Bacchi’s date of birth – to Phoenix International Ltd, a Malta-based company that holds a Class 2 online betting license issued in Malta.
CALIFORNIA TAKES ANOTHER RUN AT REGULATING VIRTUAL CURRENCIES
On 1st February Thompson Coburn published an article on the Virtual Currency Act, which would require anyone involved in a “virtual currency business” in the state to first register with California’s Commissioner of Business Oversight.
HOW TO COMPLY WITH REACH CHEMICAL REGULATIONS
On 1st February, DEFRA issued an updated news release explaining how to comply with the EU’s REACH chemical regulations when you’re using, making, selling or importing chemicals in the EU.
ISLE OF MAN GAMBLING REGULATOR WELCOMES NEW AML/CFT POWERS
On 1st February, Tax News reported that the Isle of Man Gambling Supervision Commission has welcomed 2 new laws giving it enhanced AML/CTF powers. The new Casino Amendment Act 2018 and Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Act 2018 both came into operation on 16th January.
WOMAN JAILED FOR SETTING UP FAKE COMPANIES TO LAUNDER CASH FROM £10 MILLION VIAGRA SCAM
Metro in the UK on 1st February reported that a woman has been jailed for more than 2 years for using a fake embroidery firm to launder money from a £10 million counterfeit Viagra scam. Janice Sofoulakis’ role in the 4-person operation was to open bank accounts in the name of businesses to launder hundreds of thousands of pounds. For 8 years, she was involved in the fraud with her daughter and 2 others.
IRISH COURT REFUSES MAN’S EXTRADITION BECAUSE OF BREXIT
The Guardian on 1st February carries a story saying that Ireland’s Supreme Court has declined to extradite a company director wanted for fraud to London because by the time he finishes his prison sentence the UK will have left the EU. Thomas Joseph O’Connor, 51, a construction company director, from Roscommon, had been convicted of tax fraud in London in 2007 but then absconded on bail and has now been arrested on an European Arrest Warrant.
FRAUDSTER FEE-EARNER BANNED AFTER ‘AUDACIOUS’ THEFT OF £569,000
On 29th January, the Law Society Gazette reported the case of a fee-earner who siphoned money from her firm’s client account to send to fellow fraudsters has been barred from working in the profession. Caprice Lindo, who worked in the conveyancing department of Cheshire practice O’Neill Patient Solicitors, arranged for up to £569,000 of client money to be sent in late 2013 from the firm’s accounts to her associates.
SWISS BANK PKB BROKE MONEY-LAUNDERING RULES IN BRAZILIAN CASES: FINMA
On 1st February, Reuters reported that Swiss private bank PKB Privatbank SA Lugano committed serious breaches of money laundering regulations in business linked to Brazilian groups Petrobras and Odebrecht, the Swiss financial watchdog FINMA said. Switzerland’s attorney general said it had launched criminal proceedings against the bank for failing to prevent possible crimes being committed.
2nd February 2018
AML GUIDANCE FOR THE ACCOUNTANCY SECTOR
CCH Daily on 31st January reports that HMRC has published revised draft money laundering guidance for the accountancy sector as produced by the Consultative Committee of Accountancy Bodies. This draft 2017 guidance replaces the 2008 guidance to reflect changes to Money Laundering legislation from 26th June 2017. The guidance will be published as final once it has been approved by HM Treasury.
GROUP-WIDE AML/CTF COMPLIANCE: NEW OBLIGATIONS FOR FIRMS WITH OVERSEAS BRANCHES AND SUBSIDIARIES?
On 29th January, Herbert Smith Freehills published its latest Corporate Crime Briefing. This is concerned with the measures that credit and financial institutions should take to manage money laundering risk in their non-EU overseas branches and subsidiaries, following the release in December 2017 of the European Supervisory Authorities’ Report on draft Joint Regulatory Technical Standards (RTS).Unlike the 3rd ML Directive, the 4th ML Directive requires group-wide policies and procedures. In its conclusions, the briefing mentions that the trend to encourage greater information sharing, co-operation between supervisors and law enforcement agencies, and transparency of beneficial ownership information is something that will have greater prominence under the 5th ML Laundering Directive in due course.
TEHRAN’S SHIA FOREIGN LEGIONS
On 30th January, the Carnegie Centre published a comprehensive article that says that Iran has naturally sought to fill the numerous power vacuums that emerged in the region as a result of the US-led invasions of Afghanistan and Iraq, coupled with ongoing Arab upheavals. Its “Shia foreign legions” has been a critical element of this strategy, helping it expand its influence in the Levant (Syria, Lebanon, and the Palestinian territories), Iraq, Afghanistan, and Yemen, and it has often expanded its footprint under the pretext of fighting (Sunni) radicalism. The article notes that this “foreign legion” includes individuals from various other countries, including Pakistan, Afghanistan, Indian, Iraqi and Gulf States. It says that chief and oldest among the Islamic Republic’s Shia foreign legions is Hezbollah in Lebanon. Another is the Afghan Fatemiyoun Division, which has suffered the second-largest number of losses of the “foreign legion” in Syria. Little is known about the Shia Pakistani Zeinabiyoun Brigade. The Islamic Republic’s support for Iraqi Shia militias dates back to the 1979 revolution and Tehran’s creation of a Revolutionary Guard corps, composed of Iraqi refugees and POW, and most of these armed groups are now formally organised under the umbrella of the Popular Mobilization Forces (al-Hashd al-Shaabi).
WMD FINANCING ELUSIVE ON INTERNATIONAL PLAYING FIELD – NEW REPORT
Homeland 411, a US website, on 1st February published an article on the back of the publication on 24th January of a report from Dr Jonathan Brewer (who also produced the report on proliferation typologies for Project Alpha last year). This latest report – The Financing of Nuclear and other Weapons of Mass Destruction Proliferation – which, it says, “explores funding and proliferation of WMD with insight and recommendations of how global leaders can better track sources of WMD financing. It’s not an easy undertaking. In fact, it’s a “needle in a haystack” scenario”. The report breaks down the proliferation financing into 3 phases – fundraising, disguising the funds within the financial system, and then procurement of “material, technology, and logistics” for a given WMD programme. Dr Brewer is quoted as saying that ultimately it comes down to what regulators require. In the US, banks must follow specific regulations regarding suspect transactions, but overseas, Brewer said his impression is that there’s less expertise, limited resources, and limited use of relevant data. The report urges the international community to enhance its financial controls, otherwise countries such as North Korea and others will continue acquiring illicit capabilities, and calls for better implementation of existing controls.
The Report is at –
SUPERVISION OF PILATUS BANK IN MALTA COMES UNDER SCRUTINY OF EU BANKING WATCHDOG
On 2nd February the Times of Malta reported that the EBA has opened a “preliminary inquiry” into the supervision of Pilatus Bank, to see whether the Malta Financial Services Authority was fully equipped and free from conflicts of interest to perform its supervisory duties, and to establish whether the MFSA had fulfilled its obligations as a national supervisory authority in view of the apparent lack of action against Pilatus Bank and Nexia BT. A spokeswoman for the European Banking Authority said it had received a request by the European Commission some time ago and a report from the European Parliament. The article says that a leaked report by the government’s AML agency said that failures to comply with money laundering laws had been noted during a March 2016 compliance visit to Pilatus Bank. According to the report, Pilatus Bank did not have sound AML/CFT policies for clients who classified as being PEP, but that a lot of attention was given to ensuring that the bank’s high-net worth clients, including those PEP from high-risk jurisdictions, were given assurances that their banking operations were treated with utmost secrecy.
CANADA ISSUES ALERT ON FENTANYL MONEY LAUNDERING
Global News in Canada on 1st February reported that traffickers are exploiting Canadian money service businesses to buy deadly fentanyl from overseas and then launder the proceeds through banks and credit unions, warns the national financial intelligence agency. FINTRAC is issuing a detailed operational alert to help businesses detect and report suspicious dealings that may be linked to illicit fentanyl, an opioid that is wreaking havoc across Canada. The article includes mention of the “red flags” in the alert, including –
- cash deposits followed by movement via email money transfers, transfers between accounts, drafts or cheques, or withdrawals, often at multiple financial institutions;
- significantly more email money transfers – generally for small amounts – than normal for a customer with his or her profile;
- firms that advertise pharmaceuticals, supplements, weight-loss medications and related products;
- multiple deposits with no apparent purpose that are inconsistent with the client’s occupation, employment or income; and
- customers receiving welfare or employment insurance payments, yet also get regular infusions of funds via email money transfers, wire transfers or cash.
The Fintrac alert is at –
‘COCAINE COWBOY’ ON THE RUN FOR 26 YEARS PLEADS GUILTY IN MIAMI TO DRUG TRAFFICKING
The Miami Herald on 1st February reported that Gustavo Falcon, a “Cocaine Cowboy” who hid from the federal authorities for 26 years, has finally pleaded guilty to drug trafficking in Miami federal court. Falcon was indicted along with his older brother, Magluta and other associates back in 1991 on charges of smuggling tons of cocaine into the US, ending an era that was captured for better or worse on the slick TV drug drama, “Miami Vice.” But Falcon disappeared instead of standing trial
COVERT SURVEILLANCE AND PRIVACY AT WORK
Scottish law firm, Morton Fraser, on 1st February provides a briefing saying that Tthe European Court of Human Rights has considered whether covert surveillance breaches the right to privacy. It concludes how important it is for employers to ensure that employees are aware of the nature and extent of monitoring that is taking place in the workplace. While there may be occasions where surveillance of this nature is found to be justified, appropriate, necessary and proportionate it is undoubtedly a difficult test for an employer to meet. In the UK, the Information Commissioner’s Office has stated in its employment practices data protection code that covert monitoring should only be done in exceptional circumstances. The ICO goes on to give the example of covert monitoring as part of a specific investigation which ceases once the investigation has been completed.
INDIA BOOSTS MARITIME REACH WITH SEYCHELLES PACT TO BUILD NAVAL FACILITIES
Defence Web on 31st January reports that India has signed a 20-year pact with the Seychelles to build an airstrip and a jetty for its navy in the island chain, the 2 countries said, as the South Asian nation steps up a contest with China for influence in the Indian Ocean.
US PROPOSES TRUSTED TRADER PROGRAMME FOR SEAFOOD IMPORTS
HK TDC reports that the US Department of Commerce is proposing a Commerce Trusted Trader Program as part of a seafood traceability process designed to combat illegal, unreported and unregulated fishing and seafood fraud. The DOC states that qualified importers that choose to participate in the CTTP would benefit from reduced reporting and recordkeeping requirements as well as streamlined entry of seafood imports subject to the Seafood Import Monitoring Program. Comments on this proposal are due no later than 19th March.
US GOVERNMENT WATCHDOG RECOMMENDS ACTION TO ENSURE PROPER LICENCING OF RADIOLOGICAL MATERIAL IMPORTS
HK TDC on 2nd February reports that US Customs should develop a monitoring system and take other steps to help ensure that imported radiological material, which is used for medical, industrial and research purposes, is being properly licensed, according to a recent report from the Government Accountability Office. Possession of radiological material requires a licence from the Nuclear Regulatory Commission or one of the 37 states to which NRC has relinquished licensing authority. CBP monitors ports of entry to help ensure that only properly licenced shipments are permitted to enter the US. CBP also deploys technology at and between ports of entry that can detect the presence of radiological material hidden in cargo or vehicles.
CANADA CREATES ADVISORY BODY ON RESPONSIBLE BUSINESS CONDUCT ABROAD
On 2nd February, HK TDC reports that the Canadian government has created an ombudsperson and a multi-stakeholder advisory body to promote responsible business conduct by Canadian businesses operating abroad. The ombudsperson will be authorised to investigate allegations of human rights abuses arising from Canadian corporate activity abroad, recommend solutions and monitor implementation of those recommendations. The ombudsperson’s mandate will be clearly articulated in an Order in Council and any evidence of possible criminal wrongdoing may be referred to the appropriate law enforcement authorities.
COURT IN MOSCOW SAYS FORMER CO-OWNER OF VNESHPROMBANK OWES THE BANK NEARLY $59 MILLION
RAPSI from Russia reported on 2nd February that the Moscow Commercial Court has granted a motion of the Vneshprombank seeking to put about $59 million on its creditors’ list as owed to it by a bank’s former co-owner Georgy Bedzhamov, charged with large-scale fraud.
ATM ENGINEER CONVICTED OF STEALING £26,000
The Belfast Telegraph on 2nd February reported that an ATM engineer who bought himself a new sports car for Christmas days after emptying a cash dispenser of more than £26,000 has been convicted.
AVANT GARDE (“FLOATING ARMOURY”) CASE IN SRI LANKA CONTINUES
The Sri Lankan Daily Mirror on 2nd February reported that the Colombo High Court has dismissed the petition filed by former defence secretary Gotabaya Rajapaksa asking that he and the 7 others be discharged. The Bribery Commission had filed 19 charges against Mr. Rajapaksa and 7 others for causing a loss to the government by permitting Avant Garde Maritime Services (Pvt) Limited to operate a floating armoury.
US IMPOSES SANCTIONS ON AUSTRALIAN MAN WORKING FOR ‘SIN CITY’ CASINO IN LAOS
ABC News in Australia carries a report on the US imposing sanctions on an Australian man working for a wild casino nicknamed “Sin City” in the SE Asia Golden Triangle. The Kings Romans Casino is in Laos but operates effectively as Chinese territory — offering gambling, prostitution, and the sale of endangered wildlife, such as tigers and bears. Australian citizen Abbas Eberahim reportedly provided security services for the casino.
SRI LANKA NAMES EX-BANK CHIEF AS SUSPECT IN BOND SCAM
The Daily Mail on 2nd February reports that the former head of Sri Lanka’s central bank was named in court as a key suspect in a multi-million dollar bond scam. Arjuna Mahendran, a Singapore national of Sri Lankan origin, was ordered to present himself to police before February 15th to respond to charges under the state property act. He and his bond-dealer son-in-law Arjun Aloysius are accused of manipulating of bond auctions in 2015 and 2016, causing losses of over $11 million to the state. He was not present for the hearing and is believed to be in Singapore.
OLAF STARTS INVESTIGATION INTO EU-FUNDED METRO PROJECT IN BUCHAREST
BNE on 1st February reports that OLAF suspects inflated payments were made to the building consortium which won the contract.
BRIGHT FUTURE FOR USED TRUCK EXPORTERS IN UK
Commercial Motor reports that used truck exporters in the UK can still flourish, as long as they provide a comprehensive and high-quality service, according to the boss of Volvo’s Trade & Export operation in Ely.
WHEN CUSTOMERS PLAY TO WIN – TIPS FOR RUNNING PROMOTIONS
Irish law firm, Mathesons, provided on 1st February a guide to running prize-givings and promotions, based on a recent UK case on cheating and dishonesty, emphasising that anybody running a contest or promotion should ensure that its terms and conditions are airtight – for more than just regulatory compliance reasons.
YEMEN’S TREASURES THREATENED BY ANTIQUE RAIDERS
Zawya on 1st February reported that several museums ad sites had already been looted. Archaeology buffs have warned that Yemen’s antique treasures are at risk of plunderers and urged collectors to avoid buying anything that might have been looted amid the chaos of the country’s civil war, and the International Council of Museums (ICOM) has released a 13-page “Red List” report about it for traders and customs officers at The Metropolitan Museum of Art in Manhattan.
US CUSTOMS TO USE BLOCKCHAIN TO DETECT DRUG TRAFFICKERS’ DIGITAL CURRENCY TRANSACTIONS
The US Immigration and Customs Enforcement (ICE) Homeland Security Investigations will use blockchain technology to expose digital currency transactions made by illegal drug traffickers. Coinsquare reported on 1st February that to combat the opioid crisis, ICE plans to leverage blockchain technology to track and analyse digital currency transactions, identify transactors and those who support Dark Web marketplaces. For long-term strategies to hold, ICE will train investigators from national and international agencies in digital currencies and peer-to-peer technology to deter and prevent illegal purchases of fentanyl, opioids or other illicit substances via digital currencies.
UKRAINE CAN SELL RUSSIAN-SEIZED JACK-UP RIGS TO THIRD PARTIES FOR FURTHER RECOVERY THROUGH INTERNATIONAL COURTS
The Interfax news agency in Ukraine reported on 2nd February that the country’s Chief of Ukraine’s Prosecutor General’s Office has said that the National Agency of Ukraine for Finding, Tracing and Management of Assets Derived from Corruption and Other Crimes (Asset Recovery and Management Agency, ARMA) can sell jack-up rigs (2 self-elevating floating drilling rigs), seized by Russia in Crimea, to third parties for further recovery through international courts.
BULGARIAN BORDER POLICE CORRUPTION ALLEGATIONS
Novinite on 2nd February reported that the specialised prosecutor’s office in Bulgaria accused 8 border police officers from Malko Tarnovo border checkpoint for participation in an organised criminal group. The group was operating from December 2016 to December 2017, and the investigation found that police officers wanted small amounts of money to cross the border in order to close their eyes for violations.
US TREASURY TARGETS HIZBALLAH FINANCIAL NETWORK IN AFRICA AND THE MIDDLE EAST
On 2nd February, OFAC added 6 persons and 7 entities said to have connection to Hizbollah to its SDN counter-terrorism lists, and the names include companies in Africa.
WITH MORE AND MORE ONLINE, CLOUD AND INTERNET OF THINGS WILL CYBER ESPIONAGE DAMAGE EUROPE?
An ECIPE briefing paper for February 2018 poses a question, asking that as Cloud, IoT and 5G will change the strategic paradigm for protecting European commercial interests; will cyber espionage be allowed to hold Europe back in the global race for industrial competitiveness? The risk of hacking is increasing exponentially as 26 billion personal devices, business and industrial equipment are about to become seamlessly connected in Industry 4.0. Within 5 years, an entire connected business can be copy-pasted, stolen and handed over to a competitor by a government-sponsored hacking group. While all governments spy, ipso facto. But only a few do so to hand over the information to their industry. Spying is highly lucrative, especially for emerging countries. Yet it is practically risk-free as government entities cannot be sanctioned under international law, and cyber espionage is undetectable in most cases.
EUROPE PONDERS THE US-IRAN NUCLEAR DEAL AND THREATS OVER ITS COMPANIES
EurActiv on 2nd February reports that Europe has to decide what to do in case the US makes good on its threat to withdraw from the Iran nuclear deal and re-impose sanctions on Iran. The alternative is to agree to tighter terms proposed by Washington that could hit European companies. EU has stated it will remain “fully committed” to implementing the JCPOA nuclear deal. Brussels has stood by the International Atomic Energy Agency (IAEA), which has conducted numerous inspections in Iran and said that the country has complied with all its commitments.
EU TAKES OVER AS CHAIR OF KIMBERLEY PROCESS – MIGHT IT INTRODUCE HUMAN RIGHTS CONCERNS?
EurActiv on 2nd February reported that the fight against conflict diamonds has slowed down since the creation of the Kimberley process in 2002. However, with the EU at its head in 2018, the subject of corporate responsibility could come up in talks. The EU has taken over the chairmanship of the Kimberley process for the year. The Kimberley process establishes strict guidelines obliging the 81 participating countries to control the import and export of rough diamonds. Member states can therefore only import and export diamonds amongst each other. The process also holds a certificate that enables the traceability of rough diamonds, from their mining to their commercialisation. However, the definition of a “conflict diamond” is a narrow definition, and excludes a broad range of other violations of human rights such as child labour. In practice, the Kimberley process has often failed to clean up the diamond trade, as was the case in Zimbabwe and in the Central African Republic.
EU ADDS 3 NAMES TO SOUTH SUDAN SANCTIONS
The European Council has added 3 persons involved in serious human rights violations to the list of those submitted to a travel ban and an asset freeze in view of the situation in South Sudan. It is the first time that the EU decides to sanction persons in view of the situation in South Sudan in addition to those sanctioned by the UN. The decision brings the total number of persons under restrictive measures in view of the situation in South Sudan to 9, as 6 persons were already listed by the UN. The 3 new names are – Paul Malong, Malek Reuben Riak and Michael Makuei Leuth
SOUTH AFRICA: TARGETING ORGANISED CRIME
Defence Web on 2nd February reported that South Africa’s law enforcement agencies have adopted an approach called the Organised Crime Threat Assessment (OCTA) – devised to target the actual kingpins who bankroll organised crime. The aim of the OCTA is to analyse the MO of the so-called untouchables of the criminal underworld – the dark syndicates who are the actual root of serious crime. The breakthrough relates to the arrest of 9 members of a syndicate suspected of operating a large scale VAT fraud scam.
SWISS CONFIRM ARREST OVER SUSPECTED CHARITY FRAUD
Swissinfo on 2nd February reported that Zurich judicial authorities have confirmed they are investigating an online fundraising company accused of stealing millions of dollars intended for charities, including the Geneva-based International Federation of Red Cross and Red Crescent Societies (IFRC). The boss of the company is said to be called Peter Conlon, an Irishman resident in Zurich and the fundraising platform, Ammado. Conlon is also under investigation in his homeland over his fundraising activities.
INSIGHT INTO ROMANIAN CORRUPTION NETWORKS
Euronews on 2nd February carried an article in which a Bucharest-based whistle-blower who accuses head of ruling PSD party, Liviu Dragnea, of corruption.
USING ARTIFICIAL INTELLIGENCE TO FIGHT FINANCIAL CRIME – A LEGAL RISK PERSPECTIVE
On 2nd February, law firm Allen & Overy published an interesting briefing which highlights 4 potential risks that a firm’s legal advisers may want to consider before AI is incorporated into their institution’s financial crime or AML processes – whether the information can be interpreted; AI could reinforce human bias, or impose new ones; reliance on third party software providers; and data protection issues.
HOUSE OF COMMONS COMMITTEE REPORT ON UK INVOLVEMENT IN EU SECURITY & DEFENCE POLICIES POST-BREXIT
The European Sanctions Blog on 2nd February reported that the House of Commons Foreign Affairs Committee has published a report: ‘The future of UK Diplomacy in Europe’, which outlines different models for the UK to participate (post-Brexit) in the EU’s Common Foreign and Security Policy (CFSP), and recommends that the Government should publish a position paper within 3 months outlining its aims for co-operation between the UK and EU on CFSP matters. It notes the absence of resources in the FCO to “manage the effects of Brexit” and makes a number of other recommendations.
The Report is at –
UN AND UK ADDS 4 NAMES TO DRC SANCTIONS LISTS
On 1st February, the UN Security Council added 4 additional names to the sanctions lists relating to the Democratic Republic of the Congo.
HM Treasury in the UK issued a Notice on 2nd February confirming the implementation of the sanctions measures in the UK.
UK ONLINE GAMBLING FIRMS URGED TO RAISE STANDARDS ON TERMS AND CONDITIONS FOR BONUS PROMOTIONS
On 2nd February, law news site Out-Law published an article which says that, in light of the undertakings made by Ladbrokes, William Hill and PT Entertainment, the company behind the titanbet.co.uk and winner.co.uk websites, operators must review standards committed to by three gambling operators on the terms and conditions applied to “bonus promotions” set a benchmark that the rest of industry must also meet, the Competition and Markets Authority (CMA) and Gambling Commission have said.
The Telegraph on 1st February carries an article saying that gambling companies must end misleading online ‘free bet’ offers or face action, the competition watchdog has warned. It follows an investigation into complaints that betting firms have been “trapping” players’ money and making them play for longer. The new changes will mean that players will not need to play multiple times before they can withdraw their own money.
THE BELT & ROAD INITIATIVE – CAN CHINA BUILD ITS WAY BACK TO THE MIDDLE?
On 2nd February, Control Risks published an analysis of the massive undertaking by China. It says that, in addition to large scale infrastructure projects, the BRI establishes cultural exchanges, city and university linkages, and tax advantageous zones to promote trade. New, high quality infrastructure is needed and welcomed by governments in all regions for obvious reasons. So what could go wrong?
HONG KONG’S INDEPENDENT COMMISSION AGAINST CORRUPTION
In the latest TRACE podcast, Commissioner Simon Peh of Hong Kong’s ICAC discusses its mandate, tools, successes and future challenges.
ROLE OF MEXICO’S CRIME GROUPS IN US OPIOID CRISIS
On 2nd February, Insight Crime published articles about a US TV documentary series exploring the opioid epidemic ravaging cities across the US underscores the role of Mexican organized crime groups in the lucrative industry, and how growing demand is fuelling production, and violence, south of the border.
CIVIL-MILITARY CO-OPERATION TO COMBAT ILLEGAL, UNREPORTED, AND UNREGULATED FISHING
A Summary of the September 2017 National Maritime Interagency Advisory Group Meeting was published on 30th January by the Stimson Center. This was a meeting of 100 experts on illegal, unreported, and unregulated (IUU) fishing. Attendees represented entities across the US government, several foreign governments and non-governmental organizations, as well as the private sector. The purpose of the meeting was to discuss current enforcement efforts against IUU fishing, with a focus on marine protected areas (MPA). The participants identified next steps to increase international, national, regional and sub-regional enforcement frameworks.
MEXICAN CARTELS IN COLOMBIA: SETTING UP SHOP OR SEEKING NEW PARTNERS?
Insight Crime on 31st January published an article saying that Colombian authorities have claimed that Mexican cartels are attempting to establish themselves in the country. However, it says that the presence of suspected cartel members in Colombia is more likely an indication that Mexican organised crime groups are seeking new partners to fill the vacuum created by FARC’s demobilization and the Urabeños’ decline, 2 of their closest allies.
“AIRPOWER KILLED ISIS”
An editorial in Air Force Magazine, which covers the USAF, claims that ISIS was effectively defeated by USAF-led airpower (though the article concedes it continues to present a terrorist threat).
PARTNERS IN CRIME: WHY MAFIA GROUPS AND CYBERCRIMINALS ARE JOINING FORCES
An opinion piece in the Globe & Mail in Canada, by Misha Glenny (who wrote the original, factual McMafia book). As always with Glenny, an interesting and readable article.
WITNESS PREPARATION IN SINGAPORE, HONG KONG AND THE US
An article from Eversheds Sutherland on 2nd February looks at the issue of evidence tainted by “witness coaching”.
BEHIND CLOSED DOORS – OPEN JUSTICE AND CHALLENGING SEARCH WARRANTS
Law firm Corker Binning on 2nd February published a brief looking at the first judgment of the UK Supreme Court on 2018 – Haramlambous. The article looks at the process and challenges surrounding search warrants, including how far a magistrate can rely on undisclosed (PII) evidence, and are subjects entitled to the ‘gist’ of the information relied upon against them? The target of the warrant had required disclosure of the information used to obtain the warrant. It seems the law firm considers that, to guard against potentially unlawful searches, claimants and their lawyers should be permitted to see as much as possible of the information upon which an application is based, save where actually in the public interest.
VICTIMS OF HBOS FRAUD WAIT FOR COMPENSATION
KYC 360 on 2nd February reported that victims of a banking fraud worth hundreds of millions of pounds have said they are yet to receive compensation, a year after 6 people were convicted. A former HBOS banker and five other financiers were jailed for offences committed between 2002 and 2007. Those affected said their lives have been “destroyed” by the delays. Lloyds Banking Group, which took over HBOS, have said three quarters of victims had reached a settlement. However, the articles cites one victim who was forced to sell her company at a fraction of its value after being caught up in the fraud. Lloyds has set up a £100 million fund to compensate 61 victims of the crimes, but this victim claims she has received no compensation.
US TREASURY WARNS OF UPHEAVAL IF SANCTIONS TARGET RUSSIAN DEBT
On 2nd February Bloomberg reported that the US Treasury had warned that there could be upheaval in international financial markets, if the US targets Russian bonds and the sovereign market for sanctions.
AML: TOWARDS A 2-WAY STREET?
Transparency International on 30th January published an article that began by saying that the global AML agenda is increasingly shifting from a debate about technical compliance towards whether the measures being taken by governments and businesses are effective. Also since 2014, FATF has for the first time started assessing the practical effectiveness of countries’ AML frameworks, in addition as to whether legal, regulatory and institutional AML measures are in place. Looking at the 44 countries evaluated using the new FATF standards until January 2018, private sector implementation of AML measures (IO 4) is among the areas with lowest effectiveness rating out of the 11 outcomes assessed, with major improvements needed in virtually all countries. At the same time, there is growing awareness of the value of sharing AML experiences, insights and recommendations across borders and between different groups from the private, public, and civil society sectors. It is in this context that in January 2018 Transparency International organised a workshop with representatives from the accounting and real estate sectors, civil society organizations, law enforcement, and international organisations. The article looks at the outcome of the meeting.
BLOCKCHAIN, BITCOIN AND THE FIGHT AGAINST CORRUPTION
On 31st January, Transparency International published an article saying that Bitcoin and the blockchain technology that drives it are among the most disruptive digital innovations to have emerged in recent years. Depending who you ask, these technologies are either potential catalysts for transnational crime, or potential tools in the fight against corruption. The truth, however, lies somewhere in between.
POTENTIAL CHINESE RAILGUN TESTING ILLUSTRATES THE US NAVY’S BIGGEST LONG-TERM CHALLENGE
On 1st February, RUSI commented on apparent sea trials of a weapon which can threaten all Western surface assets. One more thing for US Navy to worry over in the Far East.
FROM LONE ACTORS TO DAESH: RETHINKING THE RESPONSE TO THE DIVERSE THREATS OF TERRORIST FINANCING
On 23rd January, an article by Tom Keatinge at RUSI concludes by arguing that rethinking CTF (as the article proposes) does not mean casting aside the current model; the use of international sanctions and asset freezes to target high-level terrorist financiers and their networks should remain a core part of the global response, as should the reporting responsibilities of financial institutions. Greater emphasis must however be placed on complementary strategies that use financial intelligence to understand terrorist networks, including greater cooperation between law enforcement and private sector actors.
MONEY SERVICE BUSINESSES IN THE UK: IMPROVING THE CONDITIONS FOR EFFECTIVE FINANCIAL CRIME SUPERVISION AND INVESTIGATIONS
An 11th January paper from RUSI focuses on the measures that can be taken at the UK level to strengthen the money service business (MSB) sector’s AML oversight, and specifically to address the risk of criminally owned or complicit MSB or agents operating unhindered in the UK.