21st February 2018
MISSILE CSI: HOW WE KNOW IRAN VIOLATED AN ARMS EMBARGO
On 20th February, Popular Mechanics in the US carried an article on the verdict of the recent UN Panel report on Yemen – saying that the UN has confirmed what Saudi Arabia suspected back then: that Iran is supplying the missiles used to attack Saudi Arabia. It points out that, though a small regional conflict, The Houthi rebels firing the missiles are backed by Iran, who are in turn backed by Russia. A Saudi-led coalition backs another faction, and the Saudis are backed by the US. It says that the report opens a window on the way that missile proliferation is changing the modern battlefield in the hands of rebels and proxy armies. The report does not say that Iran is the direct supplier of the missiles but, the article says, the report remains damning for Iran.
SOUTH AFRICAN LINKS IN US HEZBOLLAH TERRORISM EXPORT CASE
On 20th February, News 24 reported that South Africa has emerged as a central location in a case involving a controversial Johannesburg-based businessman who has been accused by the US of illegally exporting items to Hezbollah, which it classifies as a terrorist organisation. The US authorities alleges that Usama Darwich Hamade, also known as “Prince Sam” and who reportedly previously claimed to be Lebanese royalty, allegedly lied, saying digital compasses for drones were needed in South Africa for anti-poaching operations. The indictment says that “Individual A”, a South African citizen and resident, apparently unwittingly ordered components which can be used in drones and jets, some of which arrived in the country, but which were then allegedly sent to Lebanon. Hamade, 53, and his brother Issam Hamade, 55, also known as Tony are both Lebanese citizens and were arrested in Johannesburg and are in custody there. A third suspect, Samir Ahmed Berro, 64, who has Lebanese and British citizenship, is yet to be arrested.
AUSTRALIA: LAWYERS “BECOMING LAZIER IN CLIENT CHECKS”
On 21st February, Lawyers Weekly reported that lawyers and conveyancers are becoming worse at verifying the identities of their clients and checking sanctions lists as part of due diligence and the undertaking of such searches is becoming much more infrequent, according to new research. The 2018 Australian Due Diligence Survey, released by technology firm InfoTrack, which examined the practice habits of multiple professional services, including lawyers, conveyancers, accountants and real estate agents. It says that only 2% of professionals are searching sanctions lists, and just 12% undertaking AML/CFT searches, the survey found. This is compared to 18% and 28%, respectively, in 2016. Further, only 12% are looking up international companies and just 2% are checking for PEP, in a striking contrast to the 40% and 16% respectively from 2016. 82% of survey respondents believe Australian directors are not fully aware of their duties under the AML/CTF Act.
ISRAELI POLICE CHIEF SPEAKS OUT AS FATF EVALUATION LOOMS
The Times of Israel on 21st February reports that the Police Commissioner also said that there was no chance of tackling cybercrime, terrorism without international co-operation. His remarks come as Israel gears up for an on-site evaluation next month by FATF, and appeared to be a veiled reference to efforts to resist increased regulation to avoid ending up on “international blacklists”. It reminds one that 18 years ago, in June 2000, FATF publicly named and shamed Israel on a blacklist — along with 14 other jurisdictions, as non-cooperative and deficient in its AML regime.
HSBC SAYS SWISS BANK TAX PROBE COULD COST MORE THAN $1.5 BILLION
Swissinfo on 20th February reported that HSBC Holdings Plc said it could face penalties exceeding $1.5 billion stemming from multiple investigations into claims that its Swiss private bank unit helped clients evade paying taxes. Authorities in the US, Belgium, Argentina, India, Spain and elsewhere are probing allegations of tax evasion or tax fraud, money laundering and unlawful cross-border banking solicitation at the Swiss private bank, HSBC disclosed in its annual report. The bank paid the French government €300 million in November to settle allegations that it helped clients hide assets from local tax authorities.
CENTRAL COLOMBIA SUPERMARKETS LOOTED AFTER PROSECUTION CLAIMS FARC MONEY LAUNDERING LINKS
Colombia Reports on 20th February reported that looters emptied Supercundi supermarkets in 4 towns after prosecutors said that the chain had been used to launder money for FARC.
EU MULLS RETALIATION OVER TRUMP TAX OVERHAUL
Politico on 21st February reports that some EU finance ministers expressed concern that Trump administration tax reforms breach WTO rules by making it easier for US multinationals to bring foreign earnings back to the US. The tough rhetoric came after the ministers gathered in Brussels to discuss a response to the US reform, which many Europeans say unfairly favours American trade interests over their own.
WHO WAS SERGEI MAGNITSKY AND WHY SHOULD YOU CARE?
Vinson & Elkins LP on 15th February provided a briefing for those wondering who Magnitsky was, and why several countries were now enacting “Magnitsky laws”.
11 MEMBER STATES BACK EU CONTROLS ON SELLING SPYWARE
EurActiv on 21st February reported that 11 EU countries have signalled their support for draft rules that would place export restrictions on companies selling surveillance technologies, a leaked working paper shows. The group are backing the European Commission’s proposal to introduce export controls on products that could harm human rights. Diplomats from the 11 countries signed off on a 6-page document embracing the Commission’s plan to create “effective EU cyber-surveillance controls for the protection of human rights”. Their paper is dated 29th January. The Commission proposed the changes to export control restrictions after it was revealed that European companies sold software to governments that used to spy on Arab Spring protesters.
AFRICA SET FOR MAJOR ASIAN INVESTMENT SURGE AFTER A TROUBLED 2017
HK TDC on 21st February carried an article saying that, with political uncertainties and domestic issues undermining growth in several of Africa’s larger economies over the last 12 months, would-be Asian investors are looking at options in a number of the continent’s less prominent nations. While the downside of Africa’s economic development attracted global headlines last year, less coverage was given to many of the continent’s success stories. Over in East Africa, Kenya, Tanzania, Rwanda and Ethiopia all attracted substantial overseas investment, as did 2 of their West Africa counterparts – Côte d’Ivoire and Senegal.
US MOVE TO PUT PAKISTAN ON TERROR FINANCING WATCH LIST DELAYED
Rferl on 21st February reported that a US motion to put Pakistan on a FATF terrorist financing watch list has been deferred for 3 months, Pakistani officials said., with a decision not to take action immediately on the US move to add Pakistan to the so-called “grey list” of countries which are not doing enough to comply with terrorist-funding regulations. Although no details were available, official sources said that China, Turkey, and Russia, all of which are on the task force, opposed the motion.
INVESTORS CLAIM STANFORD PONZI DEAL WRONGLY BARS CLAIMS AGAINST BROKER
Law 360 on 20th February reported that 316 investors in Stanford certificates of deposit in the Stanford Ponzi scheme urged a US court to overturn a $120 million deal settling claims that broker Willis Ltd fraudulently induced their investments, arguing that $120 million in settlement funds inexplicably go to the Stanford receiver and the terms of the deal indefensibly bar further claims against Willis.
OVER 41,000 ARTEFACTS SEIZED IN GLOBAL OPERATION TARGETING TRAFFICKING OF CULTURAL GOODS
On 21st February, a news release from Interpol reported that more than 41,000 objects including coins, furniture, paintings, musical instruments, archaeological pieces and sculptures have been seized in a global operation targeting the trafficking of cultural artefacts. The seizures were made during the first joint customs and police operation codenamed Athena organized by the WCO and INTERPOL, and the Europe-focused Operation Pandora II co-ordinated by the Spanish Guardia Civil and Europol. Tens of thousands of checks were carried out at airports and border crossing points across 81 countries during the operations which ran from October to December 2017. Auction houses, museums and private houses were also searched, resulting in more than 300 investigations being opened and 101 people arrested. With the Internet becoming an important part of the chain in the illicit trade of cultural goods, law enforcement officers also monitored online market places and sales sites. This resulted in the seizure more than 7,000 objects, nearly 20% of the total number of artefacts recovered during the operations.
FRONTEX PUBLISHES RISK ANALYSIS FOR 2018
FRONTEX, the EU border and coastguard agency has published its risk analysis report for 2018. This reports that, in 2017, the total number of illegal border-crossings into the EU dropped to its lowest in 4 years, especially due to a fall in detections on the Eastern Mediterranean and Western Balkan routes. However, in contrast with the 3 major migratory routes, the number of detections in the Western Mediterranean reached an unprecedented high, more than double the previous record from 2016. African nationals accounted for almost two-thirds of irregular migrants arriving at the shores of the EU. The report concludes that the sea, especially along the Mediterranean routes, will remain the most active path for illegal crossing of the EU external borders, but also one of the most dangerous for migrants. It says that Frontex is leading the way to expand the co-operation among various authorities, contributing to combatting various cross-border crimes, as well as additional coordination in search and rescue efforts.
INDONESIA SEIZES SECOND DRUG-LOADED BOAT FALSELY FLYING SINGAPORE FLAG
The Strait Times reported on 21st February that a fishing boat carrying a record 1.6 tonnes of crystal meth had been intercepted in the vicinity of the Riau Islands falsely flying the Singapore flag. It had come from Taiwan and was carrying crystal methamphetamine in rice sacks. All 4 crew members were Chinese nationals.
COURT FINDS CLAIM AGAINST PARENT COMPANY FOR NIGERIA OIL LEAKS “BOUND TO FAIL”
Osborne Clarke on 20th February reported on a UK Court of Appeal judgment handed down on 14th February, where the parent company, Royal Dutch Shell Plc was found not to be liable in relation to operations carried out by a group subsidiary, Shell Petroleum Development Company of Nigeria, Ltd (SPDC). However, the article stresses that the case highlighted the tensions that global corporations face in how they manage the risks faced across the business. It explains how jurisdiction of the English courts was established – for the claims to be brought in England, the claims needed to have a sufficient link with England and fall within one of the jurisdictional ‘gateways’ set out in the English Civil Procedure Rules. It also deals with the majority and the dissenting judgment of the judges hearing the case. It warns that the corporate veil can be pierced, preventing tortious liabilities from being ring-fenced in a subsidiary. This then requires global groups, it says, to tread a careful line, and at times make difficult decisions, between maintaining boundaries to preserve corporate separation of liabilities, and taking a more active role in order to manage risks that could affect the wider group.
LAURI LOVE CASE: US ABANDONS EXTRADITION CASE
The BBC reported on 21st February that efforts to extradite alleged computer hacker Lauri Love, 33, have been abandoned by US authorities. Earlier this month Mr Love., won his High Court appeal against his extradition to the US. He was first arrested in October 2013 on suspicion of hacking into FBI, US Central Bank and NASA systems. He is waiting to hear if he will face prosecution in the UK over claims that he stole huge amounts of data from US agencies in a spate of online attacks in 2012 and 2013.
NEW SIPRI REPORT EXAMINES PEACE OPERATIONS AND THE CHALLENGES OF ORGANISED CRIME
On 20th February, the Stockholm International Peace Research Institute launches a new background paper exploring the role that peace operations play in preventing and combating organised crime, particularly in weak or collapsed states. Multilateral peace operations are increasingly deployed in complex mission environments in which they are confronted with ‘non-traditional security challenges, such as organised crime, and peace operations are struggling to come to grips with the challenge in places such as Mali. The paper looks at examples of peace operations that have engaged in combatting organised crime, potential implications and opportunities of operations venturing further into dealing with the challenge, as well as examining the space for co-operation and co-ordination between peace operations and with other actors.
ADDRESSING SOUTH ASIA’S FISSILE MATERIAL CONUNDRUM
On 20th February, Stimson (a US-based non-partisan policy research centre working to protect people, preserve the planet, and promote security & prosperity) published this essay as part of a series in the light of nuclear competition between China, India, and Pakistan which is accelerating with the introduction of new ballistic and cruise missiles. Counterforce capabilities are growing. China has begun to place multiple warheads on some of its ballistic missiles, and Pakistan has advertised its ability to do so, and India has demonstrated this capacity in its space programme. The essays are intended to offer creative ideas that can help ameliorate and decelerate this dangerous triangular nuclear competition. This essay says that fissile material production has remained a decades-old area of competition which will continue to be a key factor in determining the size, scope, and shape of Indian and Pakistani strategic force postures. Attempts to control or ban it have so far been unsuccessful, and the essay seeks to identify the underlying causes of this impasse, and how the control could be achieved (by IAEA control of civil programmes) – and how this could of use in other regions.
MONTENEGRINS SPY GOLD ON CALIFORNIA’S CANNABIS FARMS
On 21st February, Eurasia Review carried an article saying that impoverished, indebted and disillusioned Montenegrins are heading off to California where they can earn hundreds of dollars a day on licensed marijuana plantations. It says that many of the farms are owned by Bulgarian immigrants who moved to Humboldt County in large numbers over the previous decade. Local American growers are present as well, and are favoured, as “true Americans” offer better pay and work conditions than the Bulgarians, it is said.
ISLAMIC STATE TARGETS SOUTHERN PHILIPPINES AS ‘STRATEGIC GROUND’
Eurasia Review on 21st February reports that Islamic State (IS) has chosen Mindanao island as a “strategic ground” for recruiting fighters after being routed in its Middle Eastern strongholds last year, the leader of the largest Muslim guerrilla force in the southern Philippines (the Moro Islamic Liberation Front or MILF) warned. Last year, MILF helped the military go after IS-linked groups that took over the southern city of Marawi in a 5-month siege, which left more than 1,200 people dead – a majority of them militants. The MILF leader said the chances of something like Marawi happening elsewhere cannot be overlooked. MILF would keep helping the Philippine military go after IS-allied groups.
RUSSIAN POLICY ACROSS THE MIDDLE EAST: MOTIVATIONS AND METHODS
Chatham House has published a research paper on 21st February which argues that the West’s previous failure to punish Russia for crossing its red lines in the Middle East was a significant factor in Russia’s ongoing, brutal and decisive interventions in the region. Amongst its conclusions are that Russia considers better relations with Middle Eastern countries a means to avoid international isolation, to compensate for the negative effects of international sanctions and to put additional pressure on the West; and the decision to increase Russia’s presence in the Middle East was also determined by economic drivers. The region occupies a special role in Russia’s strategy for strengthening its producers’ presence in the international oil and gas markets.
ALLEGED MONTREAL MAFIA LEADERS ACQUITTED
Specialist website About the Mafia reported on 20th February that Leonardo Rizzuto and Stefano Sollecito the alleged heads of the Montreal Mafia were acquitted of charges of gangsterism and conspiracy to traffic cocaine in Quebec Superior Court.
PARADISE PAPERS WINS POLK AWARD
The Paradise Papers investigation of wealth stashed offshore has won a George Polk Award, the International Consortium of Investigative Journalist’s second Polk Award in as many years. The team of more than 380 journalists from 6 continents was awarded the Financial Reporting Award, announced by the Long Island University (LIU) at a press conference in Washington, DC, on 20th February.
MONEY, MONEY EVERYWHERE AND NOT A COIN TO SEIZE
A blog from Corker Binning on 21st February reflects on the increasing digitisation of “cash” in the context of money laundering and the seizure of ill-gotten gains. Despite such new tools as Unexplained Wealth Orders, the post says that it will ultimately be more effective for firms and individuals to develop and use more effective tools to prevent loss in the first place.
VENEZUELA CRYPTOCURRENCY RAISES $735 MILLION WITHIN HOURS, CLAIMED PRESIDENT
KYC 360 on 21st February reported that cash-strapped Venezuela has became the first country to launch its own version of bitcoin, a move President Nicolas Maduro celebrated as putting his country on the world’s technological forefront. In its first hours on the market, the so-called petro racked in $735 million worth in purchases, Maduro said without providing details.
5 ARRESTS IN LATVIA AND DERBY AS PART OF LARGE MODERN SLAVERY OPERATION
On 21st February, the Derbyshire Constabulary reported that 5 people have been arrested during simultaneous warrants in Derby and Latvia as part of an ongoing, large-scale, investigation into modern slavery and human trafficking. Those arrested in Latvia will appear before the courts and extradited to the UK over the coming weeks. The arrests were made by Derbyshire police officers and officers from Valsts Policija (Latvian police), supported by the NCA tactical advisor.
CREDIT SUISSE EXECUTIVES GOT ASSISTANTS TO DO THEIR E-LEARNING FOR THEM
On 14th February, The Street reported on Credit Suisse AG senior executives in New York who got their assistants to complete training exercises for them. From 2013 through 2015, 3 leaders of the unit that packages mortgages and other loans into securities for sale to investors were forced to give back a portion of their 2015 bonuses after the firm realised they had failed to complete required “eLearning modules” – computer-based training programs designed to keep employees up-to-date on the latest rules and procedures, having given their logins to administrative assistants to complete the required courses on their behalf. Among the modules mentioned was Understanding Money Laundering, Terrorist Financing, Sanctions and Corruption.
SPOOFING, FRAUD CHARGES DROPPED IN EX-UBS TRADER CASE
Finance Magnates reports that a US federal judge has dropped 3 spoofing and 3 commodities fraud counts against former UBS trader, Andre Flotron, who was accused of trying to manipulate the precious metals futures market through the use of a trading tactic known as “spoofing”. The judge blasted the authorities for mishandling the evidence.
SPANISH AUTHORITIES HAND OVER RUSSIAN BUSINESSMAN LYAGIN TO FSB
RAPSI reports that Spanish authorities have handed over Russian businessman Mikhail Lyagin, charged with fraud and money laundering in Russia, to officers of the Federal Security Service (FSB), the press-release of Russia’s Prosecutor General’s Office says. Lyagin was CEO of Invest-Victoria company and allegedly embezzled $9.7 million from state company Kavkazky VSO.
PROSECUTORS UNITE AT SUMMIT TO BOLSTER GLOBAL FIGHT AGAINST SLAVERY
Thomson Reuters reported on 21st February that prosecutors from more than a dozen countries joined forces at a landmark summit in London aiming to boost the global fight against modern slavery by convicting more criminals and tracing dirty money. The 3-day event, the first of its kind, brought together prosecutors from countries including Albania, Nigeria and Sudan. They plan to work more closely to convict slavemasters and human traffickers, said the UK Crown Prosecution Service (CPS). They will discuss improving efforts to confiscate illegal gains from traffickers in a trade estimated to generate $150 billion. They will also learn how to use various tools, data and resources including Interpol and Europol.
BULGARIAN PROSECUTION SERVICE OPENS PRE-TRIAL PROCEDURE FOR POSSIBLE OFFENCES INVOLVED IN CONSTRUCTION OF BORDER FENCE
BTA in Bulgaria reported on 21st February that the specialised prosecution office has opened a pre-trial procedure for an offence connected with the construction of the fence on the Bulgarian border with Turkey – the probe was opened on December 19th. The scandal is described as “one of the biggest corruption deals of the GERB government” by a socialist politician.
CANADIAN EXPORT BANK SAYS IT FACES HUGE RISKS IN SOUTH AFRICA’S GUPTA AFFAIR
The Globe & Mail reports that Canada’s Export Development Canada says it is facing “enormous” risk of “serious and potentially irremediable harm” because the controversial Gupta family is refusing to return a Bombardier luxury jet valued at US$52 million. The EDC has filed an urgent application to repossess the Bombardier Global 6000 aircraft.
OSCE – JUDICIAL SHORTCOMINGS IN PROCESSING CORRUPTION CASES IN BOSNIA AND HERZEGOVINA
On 21st February, the Organisation for Security and Co-operation in Europe reported on a report compiled by the OSCE Mission to Bosnia and Herzegovina titled Trial Monitoring of Corruption Cases in BiH: A First Assessment. The report was developed within the framework of the project “Assessing Needs of Judicial Response to Corruption through Monitoring of Criminal Cases” and with the support of the US Department of State’s Bureau of International Narcotics and Law Enforcement Affairs. It represents the first assessment of issues negatively impacting the quality and effectiveness of the judicial response to corruption in BiH based on trial monitoring, and is based on the observation of 67 completed corruption cases in the period between January 2010 and September 2017. The main shortcomings identified by the report are insufficient harmonization of criminal legislation, inadequate capacity of prosecutors in drafting indictments and in gathering evidence as well inconsistencies in the interpretation of the law by courts.
NORTH KOREA MINE STRUGGLING AS SANCTIONS SQUEEZE REGIME
On 21st February, UPI recounts a Daily NK story that UN sanctions resolutions have hit Musan mine, one of the largest iron ore reserves in the country.
UN AND OSCE EFFORTS IN CURBING THREAT POSED BY SMALL ARMS AND LIGHT WEAPONS EXPLORED
The OSCE reported on the OSCE Forum for Security Co-operation meeting in Vienna. The UN Programme of Action to Prevent, Combat and Eradicate the Illicit Trade in Small Arms and Light Weapons (SALW) in All its Aspects, which is said to complement OSCE action in the area was described as fundamental to the security and stability of states. The article mentions that roughly 90% of victims of armed conflicts are victims of SALW (small and light weapons), and therefore, it is said, it is important to stop the illicit trafficking of weapons and key to mobilize the international community in its entirety. Adopted at the meeting was a report – Best Practice Guide on Deactivation of Small Arms and Light Weapons. The chief aim of the meeting was said to be to raise awareness of the UN Programme of Action as an indispensable element in the fight against the uncontrolled and illegal spread of SALW.
EBAY TO AUTOMATICALLY DISPLAY VAT NUMBER ON LISTINGS
Tamebay reports that eBay have announced that effective immediately that if you have previously supplied them with a VAT number that it will be displayed on all of your listings. Up until now sellers could manually choose whether to display their VAT number by specifying it in their Business Seller Information in their eBay Site Preferences.
NEW HMRC GUIDANCE: FAST PARCEL OPERATORS RECLAIMING IMPORT VAT ON RETURNED GOODS
On 21st February, CCH Daily reported that HMRC had published new guidance for Fast Parcel Operators (FPO) claiming repayment of import VAT on goods returned under a distance-selling contract. The Union Customs Code (UCC) enables importers to claim back customs duties under specific circumstances, however, it doesn’t cover the repayment of Import VAT as this is a national tax administered under national VAT law, and the new HMRC guidance covers this scenario.
The HMRC Guidance is at –
SINGAPORE CITY HARVEST MEGACHURCH LEADER ‘TRIES TO FLEE BY SEA’
The BBC on 21st February reported that Chew Eng Han from Singapore was found in a small boat heading towards Malaysia, police say, a day before he was to turn himself in after exhausting the appeals process. Chew and 5 others were convicted of misappropriating millions of dollars from the City Harvest Church in 2015. The scandal was the biggest corruption case Singapore had seen in years.
IS A CORNER FINALLY BEING TURNED IN THE UK’S FIGHT AGAINST A ‘McMAFIA’ WORLD?
On 21st February, the Royal United Services Institute published an article asks if a BBC TV drama might be the spur the UK government needs to take action on high-end money laundering. It points out that, in a report published by RUSI last year, Australia and the Republic of Ireland’s experiences were compared, both of which hold analogous ‘reverse burden of proof mechanisms’. In the case of Ireland, a combination of efficient information-sharing, resources and a fertile political climate has meant that the country holds an impressive civil confiscation record. Australia, conversely, has yielded patchy results.
TRACE PODCAST: “ILLICIT” AND THE UNDERSIDE OF GLOBALIZATION
Moisés Naím, author, public intellectual at Carnegie Endowment and former Minister of Trade and Industry for Venezuela discusses his book, “Illicit: How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy”.
INDIA: ENFORCEMENT DIRECTORATE PROBING 100 SHELL COMPANIES FOR LINKS TO BANK FRAUD CASE
Baker McKenzie on 21st February reported that the Enforcement Directorate in India is investigating more than 100 “shell companies” that are suspected to be involved in the Punjab National Bank’s near $1.8 billion fraud, a government source said. The companies were allegedly used by Indian jewellers Nirav Modi and Gitanjali Gems’ Mehul Choksi to route funds, a source at Enforcement Directorate told Reuters.
EU BRIEFING: TAX TRANSPARENCY FOR INTERMEDIARIES
On 21st February, the EU Parliament Think Tank issued a briefing about the June 2017 proposal from the Commission creating an obligation to report cross-border arrangements designed by tax intermediaries or taxpayers and by including the information collected in the automatic exchange of information between tax authorities within the EU. This would be used to combat situations highlighted by the ‘Panama papers’ and ‘Paradise papers’, where certain intermediaries and other providers of tax advice appear to have facilitated companies and individuals in avoiding taxation, often through complex cross-border schemes involving routing assets to, or through, offshore entities.
ARE DPRK HARD-CURRENCY RESERVES EXPECTED TO DRY UP BY OCTOBER?
38 North on 21st February reported that North Korea’s hard currency reserves are expected to dry up around October if international sanctions on the communist nation hold, the chairman of the South Korean parliamentary intelligence committee said.