ISLE OF MAN AMENDS ITS VENEZUELAN SANCTIONS
On 1st March, the Isle of Man followed the UK in amending 1 entry on its sanctions lists, correcting the entry for Gustavo Enrique GONZALEZ LOPEZ (formerly mistakenly referred to as “Ganzalez”).
UKRAINE MEETING NON-PROLIFERATION REQUIREMENTS, SAYS IAEA
On 1st March, the Kiyv Post reports that the International Atomic Energy Agency (IAEA) after inspections conducted at nuclear facilities of Ukraine has confirmed that the country observes the Treaty on the Non-Proliferation of Nuclear Weapons, the State Nuclear Regulatory Inspectorate of Ukraine has reported.
THE ILLEGAL PAPYRUS TRADE
On 1st March, the Hyperallergic Newsletter reported that in October 2012, a remarkable Coptic papyrus, featuring lines from St Paul’s letter to the Galatians, went up for sale on eBay. The papyrus was offered by a Turkey-based account, MixAntik, which had been active on eBay since 2008. When contacted, contacted the seller, no documentation was provided, and the seller said he did not have an export licence. The listing stated only that the fragments came from Egypt and would be shipped from Turkey. The article says that troubling stories like this have become commonplace — and academics must help change that. The author says that when he came across it, the claim was that it had been acquired it from Christie’s in 2011, only to be sold a year later through a Turkish eBay account. To this day, she says this makes no sense. In the spring of 2016, she found out that ebuyer was again active on eBay, selling more papyri.
AUSTRAC IS BUILDING A BLOCKCHAIN FOR AML REPORTS
On 2nd March, IT News reported that Australia’s financial intelligence agency, AUSTRAC, is building a proof of concept that would automate some AML and KYC reports on the blockchain. The agency is looking into so-called ‘smart contracts’ for international funds transfer instructions (IFTI) and threshold transaction reports (TTR). Smart contracts digitally automate the execution of a contract based on pre-determined terms(and are typically used to trigger a transaction online when a digital wallet contains sufficient credit to pay for the transaction).
HOW JEWELLERS MISUSED THE 80:20 GOLD IMPORT SCHEME FOR MONEY LAUNDERING
One India reports that a 80:20 gold import scheme that was launched under the tenure of former finance minister, P Chidambaram was allegedly misused by jewellers including Nirav Modi, members of the Public Accounts Committee have found. In August 2013, the then government had introduced the 80:20 rule, which said traders would be allowed to import gold only after they had exported 20% of gold from their previous import. The rule was scrapped in November 2014 after a change of government. It is alleged that it allowed the use of a process known as round-tripping, “black money” that goes out of the country returns as “white” money.
BITCOIN TRADER CHARGED WITH MONEY LAUNDERING IN SAN DIEGO
The San Diego Union Tribune on 1st March reported that a prolific bitcoin trader has been charged with money laundering in an unusual federal case. Morgan Rockcoons, 30, was arrested at the Palms Hotel in Las Vegas where he had been staying, according to court records. He is accused of selling bitcoin to an undercover federal agent who posed as a butane hash oil manufacturer, as well as operating an unlicensed money transmitting business. While marijuana is legal in California, it remains illegal federally.
SHIPPING LAW IN THE USA
On 7th December, Seward & Kissel LLP produced a comprehensive, structured guide to shipping laws in the US, including recent developments, registration, liens and mortgages, arrest and sale of ships, limitation on claims, carriage of cargo, accidents and salvage, insurance, and marine (anti-piracy) armed security.
TRAFFICKING IN HUMAN ORGANS: COUNCIL OF EUROPE CONVENTION ENTERS INTO FORCE
On 1st March, the Council of Europe Convention against Trafficking in Human Organs entered into force in the 5 first states that have so far ratified it: Albania, Czech Republic, Malta, Moldova and Norway. Aimed at preventing and combating trafficking in human organs, has been signed by another 17 states, which have not yet ratified it: Armenia, Austria, Belgium, Greece, Italy, Ireland, Latvia, Luxembourg, Montenegro, Poland, Portugal, Russia, Spain, Switzerland, Turkey, Ukraine and the UK.
US CUSTOMS PURSUING NUMEROUS INITIATIVES TO FACILITATE TRADE
On 2nd March, HK TDC reported that US Customs and Border Protection officials say that while the agency gets more attention for its trade enforcement efforts it is taking a number of steps to facilitate trade at US borders as well. These include –
Unified Cargo Processing – under UCP, US and Mexican customs officials conduct joint inspections of cargo inside the importing country. Facilities and processes are shared and the law of the host country prevails, and it being extended to the Canadian border.
AQUA Lane – at all US seaports the Advanced Qualified Unlading Approval programme allows CTPAT-validated ocean carriers that are also compliant with importer security filing and certain agriculture requirements to unlade goods immediately upon arrival in port.
Non-Intrusive Inspection – there are hundreds of large-scale NII systems deployed to and in between US ports of entry that enable CBP officers to examine cargo conveyances such as sea containers, commercial lorries and rail cars for the presence of contraband without physically opening or unloading them.
Vessel Clearance – 7 or 8 are currently required to clear an inbound cargo vessel, a manual process than can take up to 2 hours, and this can delay cargo delivery times. CBP began working to automate this process in 2015 and has now completed a majority of the work, officials said, with plans to run pilot test at several locations sometime this year. CBP is also in the process of revamping its vessel-related regulations to eliminate duplicate requirements.
US EXPORT CONTROLS ON EXPLOSIVES, PROTECTIVE GEAR, MILITARY ELECTRONICS UNDER REVIEW
On 2nd March, HK TDC reported on the consultations running to 13th April in connection with reviews of articles transferred from the US Munitions List to the Commerce Control List (CCL). Items controlled under the “600 series” entries on the CCL, including energetic materials, armoured and protective equipment, and military electronics; and to clarify controls including a complementary review to ensure that the descriptions of these items on the CCL are clear, that items for normal commercial use are not inadvertently controlled as military items on the USML.
BITCOIN TRANSACTIONS TO BE TREATED AS LEGAL TENDER FOR TAX PURPOSES IN GERMANY
BTC Magazine on 2nd March published an article saying that the Federal Ministry of Finance released a report on February 27th outlining taxable events regarding bitcoin payments. Specifically, the financial authority looked into how to tax miners, cryptocurrency transactions, and the taxable role that exchanges play in the ecosystem.
GAMBLING COMMISSION WELCOMES ENFORCEMENT ACTION ON WITHDRAWAL RESTRICTIONS
On March 2nd, Intergame reported that the UK Gambling Commission has welcomed enforcement action taken against online gambling firms for placing restrictions on customers looking to withdraw their money. The Competition and Markets Authority has announced it is writing to a number of online gambling firms regarding terms and practices that may place obstacles in the way of withdrawals, both inside and outside of promotions, such as daily, weekly or monthly limits on withdrawing funds that appear unreasonably low, the potentially arbitrary short deadlines to verify identity as a condition of withdrawing and ‘dormancy’ terms that allow firms to confiscate funds after a period of inactivity.
DUTY TO WARN: AN ADDITIONAL ASPECT OF A SOLICITOR’S DUTY
On 22nd January, Walker Morris professional negligence specialists Jonathan Brooks and Sandip Singh reviewed a recent case which highlights an additional aspect to a solicitor’s duty to its client. Instead of the longstanding Bolam test – whether the adviser acted in accordance with practice accepted as proper by a responsible body of professionals (the ‘reasonably competent practitioner’ test); in 2 recent cases a new standard of care was applied – which was concerned with whether the adviser has taken reasonable care to ensure that any material risks involved in, and any alternatives to, a proposed course of action have been fully explained to and understood by the claimant, was adopted.
JERSEY FSC SUPERVISION EXAMINATION GUIDE
On 28th February, law firm Ogier produced a briefing saying that on 19th January the Jersey FSC published its Supervisory Examination Guide, which is effective immediately and gives a detailed overview of the Supervisory Examinations conducted by the JFSC. Examinations are a key tool used by the JFSC to detect and deter breaches of regulatory standards as well as improving compliance.
THE CAYMAN ISLANDS NEW FOUNDATION COMPANY LEGISLATION
On 1st March, Ogier published an article saying that, at the end of 2017, the Cayman Islands became the latest jurisdiction to introduce a foundation vehicle onto its statute book.
POLICE SEIZED 500 KG OF COCAINE IN LUANDA PORT, ANGOLA
On 27th February, in a further illustration of the routing of illegal drugs shipments from South America via western Africa, police in Luanda seized 500 kg cocaine originating in Brazil, but had already passed through 2 other African countries.
COCAINE’S NEW GATEWAY TO EUROPE: BUSY BELGIAN PORT – ANTWERP
On 1st March, the Wall Street Journal reported that more of the drug is coming through Antwerp’s port as output from Latin America rises. Last year, 41 tonnes of cocaine, with a street value of roughly $2.5 billion, was seized in Belgium, according to Belgian customs officials and most moved through the port of Antwerp.
6 ROMANIAN CUSTOMS OFFICERS TO BE SACKED
On 1st March, Crime Moldova reported that internal inquiries had shown that 3 of them admitted the introduction of expired foreign cars into the country, 2 took possession of arrested cigarettes and 1 allowed the introduction of used shoes into the country.
TARANTULAS: CANADA BECOMES THEIR TOP EXPORTER
The BBC on 1st March reported that Canada has become the top exporter of Mexican tarantulas, according to Mexican officials. It says that there is a growing market for the creatures, which have become popular pets, and Canada has overtaken Mexico as a source. Canadian breeders were exporting 14 species, while Mexicans only traded in 5 or 6.
PODCAST: WHITE HOUSE ETHICS CZAR
In the latest TRACE podcast on 2nd March, Norm Eisen, former White House Ethics Czar and then Ambassador to Prague and current Chairman of CREW, talks about his work at the White House and the importance of setting the right tone. Norm also previews his new book: “The Last Palace.”
CAYMAN ISLANDS AML REGIME UPDATED
On 1st March, Appleby produced a briefing on the Cayman updated AML/CTF regime which includes the Proceeds of Crime Law, as amended, the Anti-Money Laundering Regulations, 2017, as amended, the Terrorism Law (2017 Revision), as amended, and the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands dated December 2017. The Guidance Notes provide practical guidelines that represent best practice for the development of AML/CTF procedures in line with international standards.
MAJOR RUSSIAN MAFIA TRIAL OPENS IN SPAIN
On 1st March, Baker McKenzie reported on a trial in which a Russian MP, Vladislav Reznik, and 17 other suspects are on trial in Madrid accused of massive money laundering for a Russian mafia gang. The alleged gang bosses, Gennady Petrov and Alexander Malyshev, are still at large, and believed to be in Russia. Some of the suspects are alleged to have Russian government connections.
NEO-NAZI GROUPS RECRUIT BRITONS TO FIGHT IN UKRAINE
The Guardian on 2nd March reported that neo-Nazi groups involved in the fighting in Ukraine are actively seeking to recruit British far-right activists, and at least 2 Britons are thought to have travelled in recent months after encouragement by people linked to the Azov Battalion, a notorious Ukrainian fascist militia, according to Hope Not Hate. This warning comes only 4 days after the outgoing head of UK counter-terrorism policing, Mark Rowley, revealed that 4 far right terrorist plots had been foiled in 2017 and that extreme right groups were seeking to build international networks.
COMPARING THE WAR ECONOMIES OF SYRIA AND LIBYA
On 2nd March, ETH Zurich published an article comparing –
Libya – the removal of the Gaddafi regime, the proliferation of armed groups and the erosion of the state’s coercive capacity have produced an environment conducive for a new set of conflict entrepreneurs and armed actors to build new – or expand upon existing – forms of revenue; and
Syria – the collapse of state authority and ongoing civil conflict has similarly led to the creation of new armed groups and a wide range of new economic elites, some aligned with the regime and others with a wide array of opposition groups. Others have generated significant revenues through their ability to deal across frontlines. The rise to prominence of these actors has, in many cases, entrenched negative incentives for the perpetuation of conflict and the disruption of conflict mediation efforts.
It points out, for example, that control of territory and economic infrastructure is a powerful tool of revenue generation in Libya and Syria. In the absence of state enforcement, powerful protection markets have emerged in which armed groups instrumentalise violence.
In Libya, oil blockades secured by armed forces have been used as a powerful tool to extort the state. The blockade in the oil crescent from 2013-6 is reported to have cost the state coffers over $100 billion, and netted the extorter over $40million from the UN-backed government. The blockade was not ended by the payment but rather when his forces were ousted from the area.
Also in Libya, open competition within Libya’s smuggling sector and, as a result of the rapid proliferation of weapons, smugglers have become increasingly reliant on armed groups.
In Syria (and Iraq), much has been made of the so-called Islamic State’s control of oil fields and the income it generated from them. But it was local tribes not Islamic State that extracted and refined the oil, and Islamic State taxed that production.
However, the article concludes, external patronage of course continues to play a direct and major role in the perpetuation of conflict in Libya and Syria.
COUNCIL OF EUROPE PRAISES AND CRITICISES GREECE ON CORRUPTION
In 2 reports published on 2nd March, the Council of Europe’s Group of States against Corruption (GRECO) mixed praise with criticism regarding Greek efforts to fight corruption in both the legislative and judicial branches of government. One report says that only 6 out of 19 recommendations made earlier by GRECO have been “dealt with in a satisfactory manner.”
NOTICE 3001: UK CUSTOMS SPECIAL PROCEDURES FOR THE UCC
On 2nd March, HMRC issued an updated version of this public notice which deals with special procedures – Inward Processing relief; Outward Processing relief; Customs Warehousing; End Use relief; and Temporary Admission (TA = temporary importing).
THE MISSING GUPTA BUSINESS JET PAID FOR BY CANADA
On 2nd March, the Washington Post said that if you spot a sleek Bombardier Global 6000 business jet sporting tail number ZS-OAK, Canada would love to hear from you. The jet belonged to South Africa’s notorious Gupta family, but the Guptas bought the plane with help from a $41 million loan from Export Development Canada, or EDC, Canada’s state-owned export-import bank. EDC was helping Bombardier, the Canadian aerospace firm, land the jet sale. But that turns out to have been a poor bet: EDC now says the family defaulted on the loan in October and still owes the bank $27 million.
UK PUMP-AND-DUMP RING “TRIED LAUNDERING VIA A PICASSO”
On 2nd March, Marketwatch reported that a London-based microcap pump-and-dump scheme tried to launder proceeds via a Picasso painting, the US government has alleged, as part of a $50 million money laundering and securities fraud scheme involving manipulation of the stock of HD View and West Coast Ventures Group Corporation. The only defendant in custody, Arvinsingh Canaye, has been assigned a public defender. The DoJ has laid criminal charges against 10 defendants, including London-based brokerage Beaufort Securities Ltd, over their alleged roles. It says that Beaufort and 2 of its managers, Peter Kyriacou and Canaye, defrauded investors from March 2014 to February 2018 including by use of “pump-and-dump” schemes. It also said 8 defendants, including offshore bank Loyal Bank Ltd located in Budapest, schemed to launder fraud proceeds. HD View’s CEO, Dennis Mancino, 46, has also been arrested and charged with conspiring to manipulate its stock
RESTRICTIONS IMPOSED ON BEAUFORT SECURITIES LIMITED (BSL) AND BEAUFORT ASSET CLEARING SERVICES LIMITED (BACSL) BY FCA IN UK – BOTH FIRMS PLACED INTO INSOLVENCY
EX-HEAD OF VATICAN BANK SENT TO TRIAL ON EMBEZZLEMENT CHARGE
Reuters on 2nd March reported that Angelo Caloia, 78, who was president of the “bank” (actually called the Institute for Works of Religion) from 1999 and 2009, and lawyer Gabriele Liuzzo, 94, have been charged. A third person who was originally under investigation, former IOR director general Lelio Scaletti, died several years ago. The bank said “unlawful conduct” by the 3 was carried out between 2001 and 2008 during “the disposal of a considerable part of the institute’s real estate assets”, and said damages had been estimated to be more than €50 million.
BANK OF BARODA TO CONTEST ‘PROCEEDS OF CRIME’ CHARGES LEVIED BY SOUTH AFRICA
The Economic Times in India on 2nd March reported the Bank of Baroda was not wilfully in possession of ‘proceeds of crime’ as alleged by the prosecution which is probing corruption and nexus between former president Jacob Zuma and an Indian-origin business family, the Guptas.
2 ARRESTED IN FRANCE FOR MAJOR “CEO FRAUD”
On 2nd March, Europol reported that house searches in France have led to the arrests of 2 individuals suspected of large-scale CEO fraud – email scams in which the attacker spoofs the boss and tricks an employee at the organisation into wiring funds to the fraudster. The criminals belonged to an organised crime group involved in at least 24 cases of CEO fraud causing €4.6 million worth of damage. The criminal investigation identified around 15 alleged Romanian company managers living in France and Belgium. They opened bank accounts and companies with the sole purpose of orchestrating CEO fraud and Forex scams. The suspects are accused of fraud, money laundering and being involved in organised crime.
MALAYSIA CID CHIEF IN AUSTRALIA MONEY LAUNDERING PROBE GOT FUNDS FROM ‘LEGITIMATE SOURCE’, SAY MALAYSIAN POLICE
On 2nd March, Channel News Asia reported that Australian police may have seized A$320,000 from an Australian bank account belonging to Malaysia’s Criminal Investigation Department (CID) director Wan Ahmad Najmuddin Mohd, but Malaysian authorities found no wrongdoing on his part.
LUKA MODRIC: CROATIA FOOTBALL CAPTAIN CHARGED WITH PERJURY
On 2nd March, the BBC reported that the Real Madrid midfielder is suspected of making false statements at the tax fraud trial of Zdravko Mamic, a former executive director at Dinamo Zagreb. Prosecutors say Mr Modric, 32, made a false statement in June 2017 over details of his transfer from Dinamo to English club Tottenham Hotspur in 2008.
SFO SEEKS RETRIAL OF FORMER TESCO DIRECTORS IN UK
On 2nd March, Reuters reported that 3 former senior Tesco executives look set to face a London jury for a second time over £250 million accounting scandal after their first trial was called off shortly before the jury was due to consider its verdictafter one of the defendants had a heart attack.
GCHQ PRODUCES FREE GUIDE TO HELP CHARITIES AVOID CYBERCRIME
Charity Tech on 2nd March reported that the National Cyber Security Centre (NCSC), which is part of GCHQ, has published an assessment of the threat to charities and a guide to help the sector minimise the risks.
The guidance is at –
IS THE ABACHA ACCORD A MODEL FOR RETURNING ‘DICTATOR FUNDS’?
Swissinfo on 2nd March carried an article asking this question and saying a recent Swiss agreement with Nigeria and the World Bank to return hundreds of millions in so-called “Abacha funds” is being hailed as a model for how other countries deal with dictators’ assets. But civil society organisations in both Switzerland and Nigeria have reservations.
MONEY LAUNDERING REVIEW FINDS MOST LAW FIRMS DOING WELL BUT URGES OTHERS TO COMPLY
Politics Home in the UK on 2nd March reported that a review of 50 firms by the Solicitors Regulation Authority (SRA) has shown that although most law firms are doing what is needed to tackle money laundering, some need to do more.
CHINA IS TURNING ETHIOPIA INTO A GIANT FAST-FASHION FACTORY
Bloomberg on 2nd March reported on a project which is China’s big experiment in outsourcing, and a $10 billion shot in the arm for Ethiopia, if there’s no civil war. Hawassa Industrial Park, built by a state-owned Chinese construction company that banged out 56 identical hangar-size, red-and-grey metal sheds devoted to textile production in 9 months, for $250 million. Lured by tax incentives, promises of infrastructure investment, and ultracheap labour, countries the Western world once outsourced production to, particularly China and Sri Lanka, are now the middlemen ramping up production here for the big labels. Ethiopia can swing such largesse because it gets lots and lots of money from China: $10.7 billion in loans from 2010 to 2015.
TAX BREAK FOR THE WEALTHY TO BOLSTER SUPERYACHT MARKET IN ITALY?
Superyacht News on 2nd March asks will a new flat-rate tax regime designed to attract the ultra-wealthy to Italy aid the superyacht market.
MEXICO CONGRESS APPROVES BILL REGULATING CRYPTOCURRENCY AND CROWDFUNDING
Jurist on 2nd March reported that the lower house of the Mexico Congress has approved a Bill that would place regulations on crowdfunding and cryptocurrency firms. It was previously passed by the senate and still needs to be signed by the President.
UK CENTRAL BANK DIGITAL CURRENCY NOT LIKELY IN SHORT TERM
Out-Law on 2nd March reported that the Bank of England is not likely to issue a central digital currency for the UK in the short term, according to the Bank’s governor.
PUSH PAYMENT SCAM VICTIMS TO BE REIMBURSED AND NEW INDUSTRY CODE PROMISED
Out-Law on 2nd March reported that an industry code to better protect victims of authorised push payment (APP) scams will be put into place in interim form by September, the Payment Systems Regulator (PSR) has announced. Such scams occur when individuals are tricked into sending money to an account that they believe is owned by a legitimate payee, but which is in fact controlled by a fraudster, and unlike in other cases of payment fraud, such as credit card fraud, the bank authorises the payment in response to an instruction from its customer.
UK PARLIAMENTARY COMMITTEE OUTLINE CONCERNS ABOUT GOVERNMENT’S PUSH FOR DIGITAL JUSTICE
Legal Futures on 2nd March reported that the Justice Select Committee expressed concern about the government’s “evident preference” for virtual and online justice over traditional, court-based models without the evidence base to justify it.
ARGENTINA’S TOP SPY ACCUSED IN BRAZIL CORRUPTION CASE
Baker & McKenzie on 2nd March reported that law enforcement in Brazil have accused Gustavo Arribas, the director of Argentina’s intelligence agency, of receiving $850,000 as part of the “Car Wash” money-laundering scheme that involved front companies in several Brazilian cities. He owns several real estate properties in Brazil.
ORGANISED CRIME GROUPS IN SOUTH KOREA INCREASINGLY OPERATING HYBRID LICIT-ILLICIT BUSINESSES
On 2nd March, Janes.com reported that domestic organised crime in South Korea is evolving into hybrid businesses with licit and illicit operations, which means that foreign investors and operators face a higher risk of interacting with these firms. At least extortion is said to be declining as a source of revenue for these groups.
COUPLE JAILED FOR FAILURE TO FULFILL £1.4 MILLION CONFISCATION ORDER
Local Government Lawyer on 2nd March reported that a husband and wife in Surrey have been jailed for a combined total of more than 12 years after they failed to pay back £1.4 million owed under a confiscation order imposed for planning breaches. Daniel Charles Beach and Linda Mary Beach were jailed for failing to comply with confiscation orders under the Proceeds of Crime Act (POCA). The length of the sentences related to the sums of money under the POCA that the court had previously ruled each couple was responsible for paying.
DEFERRED PROSECUTION AGREEMENTS COMING TO CANADA
The Canadian government has announced the results of its public consultation on corporate criminal wrongdoing and enforcement and a majority of participants in the consultation process favoured the implementation of a deferred prosecution (DPA). As a result of the consultation, the government announced its intention to introduce a DPA system in Canada, which will bring us in line with key trading partners, including the US, UK, and Australia.