The EU Observer on 5th March reported on an Icelandic parliamentary debate on whether Icelandic Air Atlanta’s transport of weapons from eastern European countries (Bulgaria, Serbia and Slovakia) to Saudi Arabia – from where they were taken to war-torn Syria and Yemen, was in breach of international agreements and Icelandic law.
5th March 2018
IMF STAFF COMPLETES 2018 ARTICLE IV MISSION TO SAMOA
On 5th March, the IMF announced that it had completed its Article IV mission to Samoa. Such End-of-Mission press releases include statements from IMF staff teams that convey preliminary findings after a visit to a country. This news release referred, inter alia, to continued efforts to mitigate Samoa’s vulnerability to the withdrawal of correspondent banking relationships. It says that Samoan authorities have taken welcome steps to mitigate Samoa’s vulnerability to the partial withdrawal of correspondent banking relationships, including progress with the implementation of the national strategy for AML/CFT, which should continue. Further progress in this area should also include establishing a database for customer identification and monitoring, and addressing risks from the offshore sector by aligning the laws governing it with international AML/CFT standards. The IMF is supporting the authorities’ efforts through technical assistance and by promoting dialogue between banks, Money Transfer Operators and regulators in the region.
MALAYSIAN CRYPTOCURRENCY NEW AML/CFT POLICY GUIDELINES
Bitcoin.com reports that Malaysia’s new AML/CFT policy guidelines specifically addressing cryptocurrencies has come into effect. The new regulations compel Malaysian virtual currency exchanges to mandate KYC adherence, including the collection of ID documentation. See –
KEY KINAHAN CARTEL ALLY CHARGED BY DUTCH POLICE WITH MONEY LAUNDERING IN IRELAND
The Irish Sun on 4th March reported that investigators in Amsterdam have accused Naoufal ‘The Belly’ Fassih, 36, of using the proceeds of crime to pay for €83,000 worth of designer watches and a pair of €800 Valentino trainers. It refers to Operation Thistle, launched by garda investigators to target mid- and lower-level members of the Kinahan Organised Crime Group, and says that Fassih is regarded as one of the biggest cocaine importers in Europe and a personal friend of mob boss Daniel Kinahan.
FRAUDSTER’S YACHT SOLD IN BID TO RECOUP HBOS LOSSES
The Times on 5th March reported that a 100 ft luxury yacht owned by David Mills, the leader of a group behind the £245 million HBOS Reading scandal has been sold as officials begin to sell off ill-gotten gains. The Powder Monkey was listed as sold by Boat International, which said that the 14-year-old yacht had been sold in an “in-house deal”, having been put on the market for €1.1 million. She has been renamed as Great Hope and sailed her from Majorca, where she had been impounded, to Egypt.
DRAFT ORDER BRINGS FINANCIAL SERVICES ACT 2012 OFFENCES WITHIN SCOPE OF DPA IN UK
Addleshaw Goddard on 2nd March reported that a draft of the Crime and Courts Act 2013 (Deferred Prosecution Agreements) Order 2018 has been published, which would bring the offences of making misleading statements (under section 89 of the Financial Services Act) and making a misleading impression (section 90) within the scope of a Deferred Prosecution Agreement. The draft Order does not yet have an implementation date but is expected to be imminent.
RUSSIA’S ENDURING LOVE FOR FAKE LUXURY ITEMS
On 28th February, Gowling WLG published an article saying that over $43 billion-worth of counterfeit goods are sold in Russia each year – and this figure is escalating, and that it is estimated that approximately 40% of all handbags, apparel and accessories sold in Russia are counterfeits. In 2017 the Federal Customs Service made headlines with the seizure of counterfeit branded Swiss watches estimated to be worth over $200 million. The article provides some surprising facts on the market for counterfeit items in Russia, and tips on what rights-holders can do.
DELOITTE PAYS £109 MILLION TO SETTLE CLAIMS OVER AUDIT FAILURES
CCH Daily on 2nd March reported that Deloitte has agreed to pay the US DoJ $149.5 million to settle claims arising from its audits of failed mortgage lender Taylor, Bean & Whitaker Mortgage (TBW), which collapsed and declared bankruptcy in 2009 and was subsequently found to have been involved in a large scale fraud.
HMRC PUBLISHED DETAILS OF DELIBERATE TAX DEFAULTERS
On 5th March, HMRC has published its latest list of those who have received penalties for deliberate errors in their tax returns or deliberately failing to comply with their tax obligations.
RUSSIAN FIRMS FUNNELLED €100 BILLION THROUGH DUBLIN
On 5th March, EU Observer reported that more than €100 billion has been funnelled through Ireland’s International Financial Services Centre (IFSC) since 2007 to Russian companies, including a Kremlin-linked bank and oil giant Rosneft, according to research from Trinity College Dublin, reported in the Sunday Business Post.
SWEDEN TO GET TOUGHER ON MONEY SENT TO EU-BLACKLISTED TAX HAVENS
The Local on 5th March reported that Sweden’s Tax Agency (Skatteverket) has been tasked by the government with putting greater scrutiny on transactions to countries on the EU tax haven blacklist, as part of EU-led countermeasures against tax evasion.
SHELL, ENI IN ‘BIGGEST BRIBERY TRIAL IN HISTORY’
Deutsche Welle on 5th March reported on the corporate bribery trial billed as the biggest-ever, opening in Milan against oil companies Shell and Eni and former and present executives. It asks did the fight over a Nigerian oil block involve massive corruption?
HOW THE POLITICAL CAPTURE OF STATE-OWNED ENTERPRISES IS DAMAGING DEMOCRACY IN CENTRAL AND EASTERN EUROPE
The Europpblog at the London School of Economics (LSE) carries a posting saying that corruption is still viewed as a key problem in many states across Central and Eastern Europe. Drawing on recent research in Bulgaria, the Czech Republic, and Romania, it highlights the problem of political actors using resources from state owned companies to help win elections, and argues that a widespread lack of accountability in managing public resources is threatening the quality of democracy in these states.
ORGANISED CRIME: FUELING CORRUPTION AND MALI’S DESERT WAR
On 5th March, ETH Zurich carried an article which says that, in discussions of Mali’s chronic problems, one factor tends to be overlooked: organised crime. Illicit activities have a long tradition in remote areas across the Sahel. Mali’s vast north, an area larger than France, is sparsely populated, and historically marginalized by the Malian state. Many people survive by smuggling items like subsidised food or cigarettes. Criminal rents are how people make a living in the marginalised north, but have also funded a myriad of armed groups and corruption networks. It says that, since the early 2000s, kidnapping for ransom, the smuggling of migrants, and the trafficking of South American cocaine across the Sahara have vastly increased criminal rents for armed groups. In economic terms, it reports, criminal rents dwarf development aid, and they can distort markets for land, cattle, or even marriage when they are reinserted in the economy. Socially, crime has further contributed to the erosion of traditional hierarchies in northern communities, as the most lucrative businesses involve members of the northern elite forging ties with corrupt security services and the political elite in the south to share the profits. Traditional authorities like religious or tribal leaders were increasingly sidelined. The article says that In its co-operation with local security forces, the international community should use its leverage and ramp up crime-related training, reinforce transparency in the management and recruitment of local security services, safeguarding programmes as well as elections from criminal influence, and make sure crime is a topic in the implementation of the peace agreement.
UK LAND REGISTRY ALLAYS CONVEYANCER FEARS OVER IDENTITY CHECKS
The Law Society Gazette on 5th March reported that HM Land Registry has insisted that requirements to confirm a client’s identity for a property transaction will not impose new liabilities on conveyancers – who are reminded in updated guidance that they face 10 years in prison if they provide false information. Its Practice Guide 67 explains who needs to confirm their identity and in which circumstances they need to do this to reduce the risk of fraud. The guide also clarifies how to complete application forms correctly, especially where an attorney is involved in a transaction.
The Practice Guide is at –
CALL TO PROTECT PUBLIC FROM UNFAIR CCJ
On 5th March, the Law Society Gazette reported that professional bodies in the UK have said proposals to protect people from unfair county court judgments (CCJ) do not go far enough – with the effort needed to dismiss a case and the time that judgments stay on an individual’s record among chief concerns. It says that over the past 4 years, the number of CCJ has risen by 59%, with more than 1 million judgments issued in 2016.
FOBT REDUCTION MAY HIT SPONSORSHIP IN UK
Intergame on 5th March reports that UK bookmaker Ladbrokes Coral is threatening to withdraw the £8 million it spends on sponsoring sports events if the payout limits on fixed odds betting terminals (FOBT) is reduced in upcoming legislation. The country’s largest bookmaker gets around 50% of its income from FOBT in its betting shops.
KUWAIT CUSTOMS FOILS ATTEMPT TO SMUGGLE ANCIENT STATUE
The Kuwait Times reports that customs officers discovered what seems to be a 170-cm-long Ancient Egyptian statue hidden inside a couch shipped by air. The statue was sent to the National Council for Culture, Arts and Letters (NCCAL) and is being examined in order to determine whether it belongs to the pharaonic era or not. A customs officer said a citizen came to collect office furniture that arrived from Egypt, and the statue was found during inspection. Action is pending until the examination results are complete.
GREECE’S COAST GUARD SEIZES $18.5 MILLION WORTH OF CANNABIS FROM FISHING VESSEL
RT on 4th March reported that the Greek coastguard had seized 1.3 tonnes of cannabis hidden aboard a foreign-flagged fishing vessel off the Island of Crete following a 3-day operation which was launched after French customs informed Greek authorities of the suspect ship ‘Celine Star’ which had sailed from Syria.
SOLICITOR STRUCK OFF FOR ROLE IN PONZI SCHEME
On 5th March, Legal Futures reported that a solicitor, Stephen Charles Pickard, formerly of Leeds firm Lupton Fawcett, jailed for his role in a Ponzi scheme – in which he used his professional credentials to persuade people to invest– has been struck off.
MISAPPROPRIATION OF UKRAINIAN STATE FUNDS: EU PROLONGS ASSET FREEZES AGAINST 13 PERSONS BY ONE YEAR
On 5th March, the EU published a news release which advised that it had extended until 6th March 2019 the asset freezes against 13 persons identified as responsible for the misappropriation of Ukrainian state funds or for the abuse of office causing a loss to Ukrainian public funds. The restrictive measures against 2 persons were not extended. This decision was based on the annual review of the measures.
CYPRUS: EX-TOP COP PROSECUTION ‘POLITICALLY MOTIVATED’
The Cyprus Mail on 5th March reported that the prosecution of former deputy police chief Andreas Kyriacou’s prosecution is politically motivated or carried out on “other orders”, his defence told the Supreme Court. He faces 3 charges for his alleged involvement in the unauthorised leaking of confidential information, including a tip from Serbian Interpol of a foiled assassination attempt, and the likely leaker of a 2015 internal police report on preventing and combating corruption to an MP and the press. He was fired by the President in May 2017. Although the case is being tried at the Nicosia district court level, the Supreme Court has been called to make a decision on whether he being prosecuted “on orders or based on political motives”. If the court determines there is enough ground to argue such a premise, the prosecution will have to hand over the contents of the investigation to the defence.
FYROM: SPECIAL PROSECUTION TO EXTEND ITS INVESTIGATIONS FOR MONEY LAUNDERING ABROAD
The Independent Balkan News Agency reported on 5th March that the head of the Special Prosecution in FYROM (Macedona)has declared that investigations are taking place in many European countries concerning cases which relate to organised crime and money laundering committed in FYROM – the UK, Netherlands and the Czech Republic being specified. The Special Prosecution was established 2 years ago to investigate the so called wiretapping scandal, where the former prime minister, former ministers and other officials were implicated.
CORRUPTION FUELING DEFORESTATION IN CAMBODIA
Deutsche Welle on 5th March reported Cambodia’s forests are being felled, as poachers and corrupt officials profit from the black market trade in rare wood species, which is being exported to Vietnam — and beyond. An estimate quoted claims that the country is losing its forest at a rate of 2,000 square km per year, with 7% vanishing over the last 12 years. It reports that, earlier this year, 3 activists tracking illegal loggers were shot dead and 6 members of the state security forces were arrested for the crime. It is claimed that logs being smuggled across to Vietnam could end up with a far higher price tag, as luxury furniture in an upscale European store. Companies importing wood into the EU have to prove it’s legal. But Rolf Schipper of Dutch NGO says illegally felled timber often slips through.
For more information on EU controls on imported timber – see FLEGT. FLEGT stands for Forest Law Enforcement, Governance and Trade, aimed at reducing illegal logging by strengthening sustainable and legal forest management, improving governance and promoting trade in legally produced timber.
RAIDS IN US LINKED TO CORRUPTION IN THE FITTING OUT OF OFFICES
Global Construction review on 5th March reported that, in October 2017, police and prosecutors from the State of New York and the Manhattan DA have raided offices belonging to the Bloomberg financial news company and Turner Construction, the American subsidiary of Spanish giant ACS – part of an ongoing investigation into suspicions of bid-rigging in New York’s $9.4 billion office fit-out sector.
HOW THE TECHNICAL BECOMES POLITICAL: FATF AND IRAN
On 5th March, the Royal United Services Institute published a commentary saying that the recent FATF plenary has drawn the organisation into political areas, and that an outsider would have seen it as a highly politicised affair. It says that, since at least 2016, the organisation has sought to walk a tightrope between positively engaging Iran while remaining mindful of the desire of many in the international community for Iran to benefit from being reintegrated into the global economy. The attitudes of the US and its international partners differ. FATF is in a difficult position and has reportedly postponed a decision for a further 4 months, by deciding to continue the suspension of counter-measures against the country – this being despite Iran reportedly falling short on 9 items that seem fundamental to even the most basic AML/CFT regime.
SCHEMES TO SELL EU VISAS, CITIZENSHIP POSE ‘MAJOR CORRUPTION RISK’
Rferl on 5th March reported that NGO Transparency International claims programmes run by some EU countries to sell visas and citizenship to wealthy foreigners are vulnerable to abuse and corruption. At least 10 European countries in the Schengen free-movement area have applied programs to trade citizenship or residency rights for investment – Austria, Belgium, Greece, Latvia, Lithuania, Malta, Portugal, Spain, Hungary, and Switzerland. Hungary suspended its scheme last year, but similar programs are also run in other EU countries outside the Schengen zone, including the UK, Bulgaria, and Cyprus. Non-EU members Armenia, Montenegro, and Moldova have also proposed similar schemes.
UK NOTICE TO EXPORTERS 2018/04: EXPORT CONTROL ORDER 2008 AND 4 OPEN LICENCES AMENDED
On 5th March, the Department for International Trade reported that it had published its latest Notice to Exporters – notifying that changes have been made to the chief source of export control law, in respect of Military List and dual-use items. 4 Open General Export Licences (OGEL) concerned with military goods have also been amended as a result.
CONSOLIDATED UK LIST OF STRATEGIC MILITARY AND DUAL-USE ITEMS THAT REQUIRE EXPORT AUTHORISATION
Also on 5th March, the UK Department for International Trade also issued an updated version of the list of ‘controlled’ military and dual-use items that require an export licence.
ROYAL MAIL INTERCEPTS 3 MILLION SCAM LETTERS TARGETING VULNERABLE
i News on 5th March reports that the Royal Mail has successfully intercepted 3 million items of “scam mail” in under 18 months, such as fake lotteries, sweepstakes and competitions are common ploys, with scammers inviting targets to send out their bank details – or make an “advanced payment” – in order to claim their “winnings”, as are letters from fraudsters posing as “clairvoyants”. Mass marketing mail scams cause approximately £3.5 billion worth of loss to UK consumers every year, according to National Trading Standards. The Logistics Manager reports that in March 2017 the Royal Mail changed its terms and conditions governing bulk mail contracts enabling it to follow up on solid intelligence by refusing to carry mail that is suspected to be fraudulent, and from April it began proactively contacting households receiving high volumes of scam mail. Royal Mail blocks and impounds scam mail at its major distribution centres before it reaches the customer’s letterbox.
AML TRENDS IN THE US EQUIPMENT LEASING AND FINANCE INDUSTRY
On 5th March, Baker Donelson published an article about recent changes to AML laws which are likely to have a profound effect on the business of equipment leasing and finance in the US. It says that the new enhanced CDD rule from FinCEN will change both legal requirements and market expectations related to identifying the beneficial owners of certain counterparties.
SEIZURE OF THE 1MDB YACHT, “EQUANIMITY”, IN BALI
Superyacht News carries a feature on the seizure of the yacht in Indonesia. The reported owner, Jho Low (also known as Low Taek Jho) a prominent Malaysian financier, is implicated in an ongoing criminal investigation with the US DoJ, and the vessel is accused of cruising in South East Asian waters to avoid being detained.
FACEBOOK MESSENGER USED TO FIGHT EXTREMISM
On 27th February, the BBC reported on a company-funded project where people posting extreme far-right and Islamist content in the UK were identified and contacted in an attempt to challenge their views. Of the 569 people contacted, 76 had a conversation of 5 or more messages and 8 showed signs it had a positive impact, researchers claim. This pilot was led by the counter-extremism organisation Institute for Strategic Dialogue (ISD), which says it was trying to mimic extremists’ own recruitment methods.
On 5th March, HM Treasury issued an updated version of the information on the approach the OFSI takes to financial sanctions and monetary penalties for breaches in financial sanctions. The several documents include –
- General guidance
- A quick guide to financial sanctions in the UK
- Guidance on monetary penalties
- Guidance FAQ for the charity sector
On 5th March, HM Treasury released the latest annual report on AML/CFT supervision. HM Treasury appoints supervisors to monitor the AML/CFT compliance of businesses that are in the scope of the Money Laundering Regulations. In order to improve the transparency and accountability of supervision and to encourage good practice, HM Treasury has worked with supervisors to develop an annual report on supervision.
The 2015 UK National Risk Assessment identified and assessed the money laundering and financing of terrorism risks faced by the UK, finding that the effectiveness of the supervisory regime in the UK is inconsistent and, whilst some supervisors are highly effective in some areas, there is room for improvement. An action plan was put in place which included a review of the supervision system, and this report shows progress in several areas. The government has also established the new Office for Professional Body AML Supervision (OPBAS) hosted by the FCA, which will work with professional body AML supervisors to help ensure they provide consistently high standards of supervision.
On 3rd March, the Washington Post carried a thorough article beginning in a seaport called Kholmsk in Russia’s Far East. It says that at least 4 ships of different flags showed up in August and September to unload North Korean anthracite. Then, 6 other ships arrived to pick up coal and deliver it to foreign markets- the illicit North Korean coal transformed into Russian coal, which can be legally sold anywhere – some ending up in South Korea and Japan. Citing the recent UN report, it says that North Korea developed a complex scheme that depended on stealth, falsified documents and the heavily choreographed participation of officials and businesses in at least 3 countries.
On 5th March, Legal Futures reported that more than 1 in 10 law firms assessed for compliance with government money laundering obligations by the Solicitors Regulatory Authority brought in last year have been referred for disciplinary action. It reports that so concerned was the SRA about the profession’s AML performance that it issued a public warning notice, after scrutiny of 50 firms led to 6 being earmarked for the disciplinary process.