31st March 2018
CONFLICT IN YEMEN AND EU’S ARMS EXPORT CONTROLS: HIGHLIGHTING FLAWS IN CURRENT REGIME
Eurasia Review on 29th March provided an analysis of apparent flaws in the export control systems on EU Member States. Comparing the reality to what is required by the EU Common Position of 2008 on Arms Exports. The criteria include denying licences when there is a ‘clear risk’ that the arms ‘might’ be used to commit violations of human rights or international humanitarian law and ‘[taking] into account’ the risk that they will be diverted to an unauthorized end-user or end-use. It points out that, according to SIPRI data, the leading members of the Saudi-led coalition—Saudi Arabia and UAE — were the 2nd and 4th largest arms importers during 2013–17, respectively, and the UK and France were the second and third largest suppliers to Saudi Arabia in 2013–17, and France and Italy were the second and third largest suppliers to the UAE. The analysis asks how can the EU Common Position be strengthened, explaining that during 2018, the European External Action Service (EEAS) and Member States are due to reassess the implementation of the Common Position and fulfilment of its objectives.
UKRAINE INTELLIGENCE CLAIMS TO HAVE CAUGHT IRANIANS SMUGGLING A SHIP-KILLING MISSILE
On 30th March, the Daily Beast carried an article reporting that in January, 2 Iranian nationals tried to buy parts of an advanced missile in Kyiv, according a spokesperson for the Ukrainian intelligence service, in an apparent attempt to evade a UN arms embargo on Iran. The article claims that the incident became a secret diplomatic incident, and both men were detained and then quietly deported to Iran. The Iranians tried to procure Kh-31 anti-ship missile components, produced in Ukraine, with the Kh-31 being a Russian-designed anti-ship weapon that can fly along the surface of the sea at supersonic speeds. Anti-ship cruise missiles are said to be one of “4 core areas” which the Islamic Revolutionary Guard Corps Navy (IRGCN) has prioritised for naval weapons acquisition, according to a study in 2017 published by the US Office of Naval Intelligence (ONI).
FINANCIAL STABILITY BOARD ACTION PLAN ON ACCESS TO BANKING SERVICES BY REMITTANCE PROVIDERS
On 30th March, Shearman & Sterling published an article saying that the Financial Stability Board (FSB) – an international body that monitors and makes recommendations about the global financial system – has published 2 reports relating to its actions to address the decline in correspondent banking. One is addressed to the G20 Finance Ministers and Central Bank Governors on the FSB’s 4-point action plan to assess and address the decline in correspondent banking relationships. The other is a stocktake of remittance service providers’ access to banking services, where the decrease in correspondent banking relationships has impacted the ability of remittance service providers to access banking services. The FSB has identified a number of reasons why banks have stopped providing banking services to remittance service providers, including perceived AML/CTF risks, divergence across jurisdictions in regulatory oversight of remittance service providers and a low level of compliance with international standards. Recommendations are made that the FSB believes will improve access to banking services by remittance service providers, and it intends to report to the G20 in July 2019 on the steps and actions taken in relation to the recommendations.
CANADIAN CONVICTED IN $18 MILLION TELEMARKETING SCAM CASE IN US
The New York Post on 30th March reported that Mark Eldon Wilson from Vancouver, owner of a Canadian telemarketing operation has been convicted of mail and wire fraud for orchestrating a scheme that prosecutors say defrauded at least 60,000 people out of more than $18 million in 1998-2001. Wilson masterminded a cross-border scheme that targeted elderly victims with a bogus protection programme for credit card fraud in 37 US states.
US SEEKS OVER 6 YEARS PRISON FOR MACAU BILLIONAIRE IN UN BRIBERY CASE
Reuters on 30th March reported that Macau billionaire Ng Lap Seng faces more than 6 years in prison, after being convicted in July 2017 for bribing 2 UN ambassadors to help him build a multi-billion dollar conference centre which was never built. He was accused of paying more than $1 million of bribes to officials including the late former UN General Assembly President, John Ashe.
LUXEMBOURG REGISTER OF BENEFICIAL OWNERS
On 30th March, White & Case published an article saying that the Luxembourg parliament is reviewing the draft Bill implementing Article 30 of the 4th ML Directive, with a view to implementing additional obligations for certain Luxembourg corporate entities about notifying beneficial owners. Requirements include maintaining certain records at the registered office in Luxembourg. The information will have to be provided within 1 month from the date of its incorporation (or any changes to its beneficial ownership) for a new register of beneficial ownership called REBECO. However, the article says that the draft Bill is still undergoing the required consultation process with the Luxembourg legal, financial and commercial sectors’ representative bodies.
CANADIAN FEDERAL AND PROVINCIAL GOVERNMENTS TARGET ILLEGAL TOBACCO WITH NEW FUNDING
The Globe & Mail in Canada on 30th March reported that the federal and provincial governments are planning to put more money into the fight against contraband tobacco − a thriving black market that is rife with organised crime, costing billions of dollars a year in lost tax revenue. In Ontario, for example, it is believed that roughly one third of cigarettes are from an illicit source. The RCMP has estimated that there are roughly 175 organised-crime groups in Canada with ties to the illicit tobacco market.
RUSSIA DEMANDS EXPLANATION FOR BRITISH CUSTOMS SEARCH OF AEROFLOT JET
On 31st March, Rferl reported that Russia has demanded an explanation from British authorities over their search of an Aeroflot plane at Heathrow airport. Customs officials boarded and searched the plane after it arrived from Moscow and passengers disembarked on March 30th, without providing any explanation of their reasons for the search.
RUSSIA: CRIMINAL CASE OPENED AGAINST OWNERS OF SUMMA GROUP
The TASS news agency in Russia reported on 31st March that Ziyavudin Magomedov and Magomed Magomedov, co-owners of Summa group of companies, as well as Head of the company in the group, Artur Maksidov, were detained on fraud and criminal association charges. Embezzlement of budgetary funds on a grand scale, including those allocated for the construction of infrastructure and power supply facilities, is apparently alleged. The Summa Group is self-described as a diversified private holding company with significant investments in port logistics, engineering, construction, telecommunications, and the oil and gas sector.
LONDON, THE MONEY-LAUNDERING CAPITAL
As part of a feature on the “cancer” of corruption, Chatham House published this article by the Executive Director, Transparency International UK, which states that the City’s money markets clean up an estimated £90 billion of illicit funds each year.
CORRUPTION: HOW THE DISEASE IS SPREADING
In another Chatham House article, Trisha de Borchgrave talks to corruption expert Sarah Chayes, an award-winning National Public Radio journalist, moved to Afghanistan to cover the fall of the Taliban, about the threat to world order. Chayes left journalism and set up a manufacturing business in Afghanistan. She found that as billions of US aid dollars flowed in, much of it ended up overseas in property and other assets in more stable locations. Chayes concluded that Afghanistan was not a country with a corruption problem but one governed by a crime syndicate. In 2010, she became an adviser on strategic policy to the US chairman of the joint military chiefs of staff, and in 2014 she published, “Thieves of State: Why Corruption Threatens Global Security”, described as a wake-up call on the globalisation of the illicit quest for wealth and how it drives people to political and religious extremes.
CORRUPTION: DEFINING THE CRIME
A further Chatham House article by Sean Hagan, General Counsel and Director of the Legal Department of the IMF, provides an outline of the different forms corrupt acts can take. It starts with the UN Convention Against Corruption (UNCAC), which 183 state parties have ratified, and which identifies a core set of corrupt acts that state parties are required to criminalise. The different forms it describes includes –
- Unilateral corruption (acts such as embezzlement);
- Transactional corruption (which involves an exchange – typically with the corrupt actor taking, or abstaining from taking, an official action that affects a private party’s interests, and the private party);
- Extortive or coercive corruption (where an official coerces a benefit from a private party by threatening an adverse official act if the private party does not comply); and
- Collaborative or collusive corruption (where a private party initiates the transaction – or at least is a willing participant).
Any of these may be grand and petty corruption, based simply on the magnitude of the action or size of the bribe; and there is a distinction between incidental and systemic corruption. A distinction is also sometimes drawn between administrative corruption, referring to corruption in the implementation of laws and regulations and state capture, where the very legal framework is fixed in advance to favour those who bribed the legislators.
CANADA TO TARGET SMUGGLING OF STEEL INTENDED TO DODGE US TARIFFS
Customs Today on 31st March reported that PM Justin Trudeau has said that Canada will act to prevent the smuggling of cheap steel and aluminium into the North American market to avoid new US tariffs on the metals.
US PROBE INTO INSOLVENCIES LINKED TO ALLEGED INDIA FRAUDSTER
Law 360 on 31st March reported that the US federal government’s bankruptcy watchdog is seeking the appointment of a special examiner to investigate Indian billionaire Nirav Modi’s ties to his bankrupt US jewellery businesses, citing accusations that he orchestrated a $2 billion banking fraud in India.
MALTESE COURT ORDERS EXTRADITION OF MAN CONNECTED TO ‘GAME OVER’ GAMBLING ANTI-MAFIA OPERATION
Malta Today on 31st March reported that the Maltese Court has ordered the extradition of Alessi Diomiro, 33, to Italy to face charges related to organised crime. He was arrested against a European Arrest Warrant issued by the magistrate of the Court of Palermo. Last month, the Malta Gaming Authority suspended the gaming licence of Phoenix International Ltd, following raids as part of an Italian anti-mafia police operation dubbed ‘Game Over’. Diomiro had allegedly managed to escape from the raid which led to the arrest of 30 people, including the ‘betting boss’ Benedetto Bacchi – who reportedly controlled a network of 700 betting shops across Italy. He is said to be a corporate representative in Malta of Bacchi, and of holding administrative positions in the Maltese companies BL Man Limited and Dodoone Limited.
BRAZIL: DOCUMENTS APPEAR TO LINK PRESIDENT TEMER TO PORT BRIBERY SCANDAL
On 31st March, Telesur provided an update on the case linking President Temer to a corruption scandal relating to a decree regulating the country’s ports. Operation Skala has been launched to ascertain whether or not Temer received bribes to help shape the decree. Other documents found by police appear to link Agreplan, a firm belonging to Joao Baptista Lima Filho, a close friend of Temer, to the scandal. These documents along with other allegations led to a search and seizure operation at Agreplan headquarters, as well as 13 arrest warrants, according to Brasil 24/7.
DOMINICA: WHERE YOU CAN GET A NEW PASSPORT, AND A NEW NAME
In his continuing coverage of citizenship by investment (CBI) and similar passport and visa schemes operated by some Caribbean states, Kenneth Rijock in his blog tells of an agency located in Dubai and said to market to Iranian clients. He says that the agency’s website actually explains that CBI clients can take advantage of Dominica’s Deed Poll Law and may legally change their name 1 year after obtaining their CBI passport. He says that the website even advises that the client’s previous legal name will not appear on their passport.
US EXTENDS ITS SOUTH SUDAN SANCTIONS AND “MALICIOUS CYBER ACTIVITY” SANCTIONS FOR ANOTHER YEAR
The always informative European Sanctions Blog on 31st March reported that on 27th March, President Trump extended for 1 year the sanctions contained in EO 13664 concerned with South Sudan. The asset freezes and travel restrictions were imposed for activities that threatened the peace, security, or stability of South Sudan and the surrounding region. On the same date, Trump also extended the application of EO 13694 (as amended) for a further year. These sanctions impose asset freezes and travel restrictions on those engaged in malicious cyber-enabled activities originating from, or directed by persons located, in whole or in substantial part, outside the US.
UNODC PROMOTES UNIVERSALISATION OF INTERNATIONAL LEGAL INSTRUMENTS AGAINST NUCLEAR TERRORISM
On 29th March, the UN Office for Drugs and Crime reported that representatives of over 30 Member States, experts and the UN actors, gathered in Vienna to discuss the importance of becoming a party to, and fully implementing, the international legal framework against nuclear terrorism. It says that the relevant international instruments – the International Convention for the Suppression of Acts of Nuclear Terrorism (ICSANT), the Convention on the Physical Protection of Nuclear Material (CPPNM) and its 2005 Amendment – provide tools to ensure that there is no safe haven for those committing the acts that they establish as offences. However, these instruments could realise their full potential only with universal ratification since security is only as strong as the weakest link.
EAST AFRICA: ANTI-CORRUPTION CONFERENCE ON WHISTLEBLOWER PROTECTION, PUBLIC PROCUREMENT
On 29th March, the UN Office for Drugs and Crime reported that further steps were taken towards the creation of a regional forum on anti-corruption in public procurement for Eastern Africa as 35 governmental representatives and civil society organizations gathered in Arusha, Tanzania in a conference organised by UNODC to discuss public procurement and whistleblower protection. At the event participants discussed current challenges and decided to establish a Regional Public Procurement Anti-Corruption Forum (RPPAF) with a view to advancing cross-regional anti-corruption and procurement strategies. The Forum will be constituted by a country-specific National Public Procurement Anti-Corruption Task-Force for Burundi, Djibouti, Ethiopia, Kenya, Rwanda, Tanzania and Uganda. It is envisaged to reconvene in 6 months to discuss progress made.
PROJECT TO DIGITISE FIATA & NVOCC BILLS OF LADING
On 29th March, the international federation of freight forwarders associations (FIATA) reported that it had signed a MoU with essDOCS to provide a framework for further co-operation in digitising Bills of Lading. essDOCS enables paperless trade and its solutions digitise and automate paper-heavy processes. Over 36,000 companies, ranging from 31% of the Fortune Global 100 to innovative SMEs, use essDOCS solutions across 169 countries.
US REPORT ON TRADE BARRIERS FACING EXPORTS
On 30th March, Baker McKenzie reported that the Office of the US Trade Representative (USTR) had released the 2018 National Trade Estimate (NTE), an annual report documenting foreign trade and investment barriers facing American exports around the world.
AFRICAN COUNTRIES LAUNCH AFRICAN CONTINENTAL FREE TRADE AREA (AFCFTA)
Also on 30th March, Baker McKenzie reported that on 21st March many African countries signed the Agreement Establishing the African Continental Free Trade Area (AfCFTA) – the article lists the countries involved and what they have signed up to. The goal of the AfCFTA is to create a single market, followed by free movement and a single currency union. Once all documents are concluded and ratified by 22 states, the free trade area will formally exist. Baker McKenzie notes that notably absent was Nigeria, one of Africa’s largest economies and its most populous country, and although South Africa did not sign the AfCFTA text, it is committed to signing once internal legal processes are completed.
On 28th March, Clifford Chance referred to the above as a major step towards a Single African Market.
ORGANISED GANG IN THE NORTH BEHIND £1.3 MILLION HERBAL CANNABIS IMPORTATION IN IRELAND
The Irish Examiner on 31st March reported that 3 pensioners were among 6 people arrested after the haul was found on a shipping pallet inside an industrial sized fuel tank at a property in Dromore, Co Down. The article quoted the PSNI as having previously said there are between 60 and 70 organised crime gangs in the drugs trade in Northern Ireland.