6th March 2018
IMF STATEMENT ON QATAR
On 5th March, the IMF released its end of mission statement following its Article IV mission to Qatar. The statement includes the remarks that the authorities are increasingly focusing on enhancing AML/CFT effectiveness and strengthening anti-corruption regimes, and they are putting in place a comprehensive mechanism to implement targeted financial sanctions and managing risks posed by non‑profit organisations. In addition, priority is given to the combating of terrorist financing legal framework, and the assessment of national risks.
IMF CONCLUDES MISSION TO SOLOMON ISLANDS
Meanwhile, on 5th March EIN Newsdesk reports on a statement at the conclusion of an Article IV IMF mission to the Solomon Islands. This includes the call to strengthen revenue compliance, improve the legal framework, and strengthen the AML/CFT framework and to foster anti‑corruption efforts.
HOW ILLICIT FINANCE CONTROLS CAN MAKE IT HARDER FOR NON-PROFITS TO SERVE THE WORLD’S NEEDIEST – AND WHAT TO DO ABOUT IT
On 5th March, Relief Web carried an article concerned with a recent conference held in the Netherlands addressing this issue. The attendees discussed the extent of the problem, its root causes, and what can be done about it and, while the organisers will soon publish a more detailed report, the article offers some preliminary thoughts. It says that due to the multifaceted nature of the problem, tackling it will necessarily entail a co-ordinated effort on the part of policymakers, banks, and NPO. Policymakers should continue to work with banks and NPO to ensure that regulatory guidance is properly understood and followed. It notes that currently only in Somalia are humanitarian organisations exempted from UN sanctions. NPO should continue to strengthen their own AML/CFT risk controls and to be proactive in managing their relationships with their banks. In addition, large NPO might consider how they can provide compliance or financial-management support to the smaller NPO they often work with to provide last-mile services, often in the most volatile circumstances.
LONDON ART DEALER NAMED IN A $50 MILLION MONEY LAUNDERING CASE INVOLVING PICASSO PAINTING
The Antique Trades Gazette on 5th March carried a report on the New York money laundering case, saying that Matthew Green, 50, who set up Mayfair Fine Art in January 2017, is named alongside 5 other individuals and 4 businesses in an indictment. Green is named in the case relating to the attempted sale of a Pablo Picasso painting to an undercover FBI agent.
WARNING TO ESTATE AGENTS THAT HMRC IS ON THE WARPATH OVER AML
Estate Agent Today on 5th March mentioned a survey undertaken by a leading software provider showing that only 12% of agencies fully understood their regulatory and legal requirements relating to AML. It quotes a specialist as saying that HMRC has advised that the money laundering regulations have been in place long enough within the estate agent industry and that their approach is now less on warnings and more on penalties, and that during 2017 it was widely reported that over 800 agencies had been fined by HMRC for AML failings.
TURKEY FINES ITALIAN €100,000 FOR TRUFFLE SMUGGLING
On 5th March, the Daily Maverick reported that the Istanbul forest region management authority had said that an unnamed suspect was fined after being caught trying to take the fungus across the border to Bulgaria.
CORRUPTION AND BRIBERY OFFENCES IN CANADA
On 20th February, Osler published an article providing a structured guide to bribery and corruption offences in Canada.
https://www.lexology.com/navigator/#!results/283
FINCEN: NO SAR FILING OBLIGATION WHEN CUSTOMERS VOLUNTARILY DISCLOSE TO HOME COUNTRY
On 5th March, Jones Day reported that FinCEN on 21st February issued guidance following a response to an enquiry from the Florida International Bankers Association. FinCEN stated that a US financial institution is not required to file a SAR after learning of a customer’s voluntary disclosure of past non-compliance to a foreign taxing authority. FinCEN did agree with FIBA that the institution should subsequently consider undertaking a review of its customer’s accounts.
ISRAEL IS ‘ONE OF THE WORLD’S MOST GENEROUS TAX HAVENS,’ COMPLAINS TAX CHIEF
The Times of Israel on 6th March carried an article about a 2008 law amendment which may have attracted tax evaders to Israel, and a warning from Tax Authority director Moshe Asher, who has tried for years to cancel it.
SIMPSON MILLAR FINED FOR PART IN £4.5 MILLION STAMP DUTY AVOIDANCE IN UK
The Law Society Gazette on 6th March reported that a national law firm that helped clients avoid stamp duty in more than 230 conveyancing transactions has been fined by the Solicitors Regulation Authority for its part in the schemes. Simpson Millar undertook the transactions between April 2009 and January 2011 where clients had been party to a stamp duty land tax scheme to avoid paying. This resulted in the non-payment of at least £4.57m to HMRC.
ANALYST AND 3 OTHERS FACE INSIDER TRADING CHARGES INVOLVING AMAYA IN CANADA
On 6th March, Calvin Ayre reported that the Ontario Securities Commission is investigating irregularities that occurred at the time of the 2014 deal involving Amaya, now the Stars Group, owner of the PokerStars online gambling site.
https://calvinayre.com/2018/03/06/business/analyst-3-others-hit-amaya-insider-trading-claims/
CANADIAN SECURITIES REGULATORS UPDATE MARIJUANA SECTOR DISCLOSURE REQUIREMENTS
On 1st March, Gowling WLG published a briefing saying that Canadian securities regulators recently released updated guidance to public companies with marijuana-related interests in the US — guidance that outlines enhanced disclosure obligations. It says that whilst this guidance resolved uncertainty with respect to securities trading in companies involved in the sector in the wake of the recent rescission of the Cole Memorandum, the Toronto Stock Exchange, TSX Venture Exchange and Canadian Securities Exchange have not yet released statements addressing the updated framework.
AUSTRALIAN BORDER FORCE SHUTS DOWN SERIAL EPHEDRINE IMPORTER
WCO Iris on 6th March carries a story saying that ABF investigators have arrested a 34-year-old Chinese national after they intercepted 13 individual shipments of ephedrine destined for various addresses across Sydney.
http://newsroom.border.gov.au/channels/NEWS/releases/abf-shuts-down-serial-ephedrine-importer
RISING BRAZIL BORDER SEIZURES TROUBLING SIGN FOR THE REGION
Insight Crime on 5th March reported that even without significant investment in border security, weapons and narcotics seizures along Brazil’s borders have increased over the last year, giving rise to the possibility that this increase is being driven by underworld dynamics. It reports that there was a 33.5% increase in seizures of arms illegally crossing into the country in 2017. 95% of weapons seizures occurred where it shares a land border with Paraguay. The remaining 5% were transported by small planes between Bolivia and Paraguay to the interior. Marijuana and cocaine seizures also rose by 74.1% and 39.4% respectively.
https://www.insightcrime.org/news/brief/brazil-frontier-region-busts/
BATTLE OVER VENEZUELA GOLD BEHIND KILLINGS OF MINERS
Insight Crime on 5th March reported that the war for gold between the military, government officials and criminal organizations involved in illegal mining could be the motive behind the killings, which have increased in the midst of the country’s worst economic crisis and the threat of international sanctions on its main export: oil.
ACCOUNTANTS IN UK TO CHALLENGE GOVERNMENT DECISION ON RIGHTS TO HANDLE LEGAL WORK
Legal Futures on 6th March reports that the Institute of Chartered Accountants in England and Wales (ICAEW) has launched judicial review proceedings against the MoJ over the decision to deny its members the right to conduct litigation, advocacy and legal instruments work.
BRITISH AND UKRAINIAN LAW ENFORCERS AGREE TO DEEPEN CO-OPERATION IN COUNTERING CYBERCRIME
Interfax Ukraine on 6th March reported on a meeting in London between the Head of the Ukraine National Police and Head of International Relations at the NCA and Head of the British National Cyber Crime Unit (NCCU), according to the press service of the National Police of Ukraine reported.
http://en.interfax.com.ua/news/general/490075.html
COLLAPSE OF IRAN NUCLEAR DEAL WOULD BE ‘GREAT LOSS,’ SAYS UN ATOMIC AGENCY CHIEF
The UN News service on 5th March reported that Iran is implementing a series of commitments under the nuclear agreement reached with key countries in 2015, the head of the UN nuclear energy agency IAEA said. IAEA has installed some 2,000 tamper-proof seals on nuclear material and equipment, collected and analysed hundreds of thousands of images captured daily by its sophisticated surveillance cameras in Iran. He also said “the most important event” in the IAEA calendar this year is Ministerial Conference on Nuclear Science and Technology, which will take place in Vienna from November 28th to 30th 2018.
https://news.un.org/en/story/2018/03/1004112
FCA BANS FORMER CO-OP BANK HEAD FROM FINANCE INDUSTRY
Mondo Visione on 6th March carried a report saying that the FCA has banned the former Chair of Co-operative Bank PLC, Paul Flowers, from the financial services industry. He was Chair of Co-op Bank between 2010-2013. The FCA found that Mr Flowers’ conduct demonstrated a lack of fitness and propriety required to work in financial service.
IF THE US DEPARTMENT OF DEFENSE CANNOT GET THE REVIEW RIGHT, WHAT ABOUT THE MISSILES AND BOMBS…?
On Daniel Salisbury’s Twitter site, a poster points out that, after previously having pointed out map errors and modernisation misrepresentation in the US Nuclear Posture Review he finally got a printed copy…only to find DOD had printed the content upside-down…
https://twitter.com/twitter/statuses/970791219906441217
EU-LISA SUCCESSFULLY LAUNCHES SIS II AFIS PHASE ONE ALLOWING FINGERPRINT SEARCH FACILITY
On 6th March, a EU news release advised the successful first phase of the SIS II AFIS platform. The platform enables the identification of a person from his/her fingerprints alone. AFIS is the Automatic Fingerprint Identification System. The aim of SIS II AFIS is to allow all the Member States to leverage on a centralised policing-oriented database. The Schengen Information System (SIS) is a highly efficient large-scale information system that supports external border control and law enforcement cooperation in the Schengen States, for more information on it see –
FULFILMENT BUSINESSES (APPROVAL SCHEME) REGULATIONS 2018 IN UK
These UK regulations, SI 2018/299, set out the detailed framework for the Fulfilment House Due Diligence Scheme. The scheme applies to fulfilment houses operating in the UK that handle imported goods on behalf of third parties located outside the EU. They make provision for applications for approval to carry on a third country goods fulfilment business, obligations imposed on approved persons (including due diligence and record keeping) and penalties for non-compliance. The scheme opens for applications on 1st April, and will enable HMRC to recover the import VAT due on the imports.
http://www.legislation.gov.uk/uksi/2018/299/made
HMRC on 6th March also published a briefing in the form of a Tax Information and Impact Note about the fulfilment and storage businesses that handle imported goods on behalf of third parties located outside the EU.
https://www.gov.uk/government/publications/vat-fulfilment-business-approval-regulations
THE LONG PROCESS TO A SINGLE CENTRAL AFRICAN ECONOMIC BLOC
ENACT Africa on 21st February carried an article which says that Central Africa may soon create a single, unified regional economic community. At present, it has 3 major regional mechanisms that co-ordinate activities, including the Economic Community of Central African States (ECCAS, established in 1981), which is the regional economic community for Central Africa that is officially recognised by the African Union. Recently, however, states in the region have agreed to step up efforts to merge the 3 bodies into one regional economic bloc.
SUDAN ADOPTS ANTI-CRIME MEASURES AND CLOSES BORDER AREA
On 8th February, ENACT Africa reported that Sudan had closed its Eritrean border and deployed troops in response to arms, drug and human trafficking. The article says that, as the third largest refugee-hosting country in Africa, Sudan is a major origin, transit and destination hub for migrants from across Africa, and thousands of people from Eritrea and Ethiopia enter Sudan on their way to Europe.
NEW US SANCTIONS MEASURES PUT SHIPPING INDUSTRY ON NOTICE OF NORTH KOREA SANCTIONS RISKS
On 2nd March, Baker & McKenzie published this briefing emphasising the risks facing those involved in international shipping if they become involved with shipping to or from North Korea, or in any way involved in North Korean shipping.
http://www.mondaq.com/article.asp?articleid=678846&email_access=on&chk=1639670&q=960824
FIRST BRITISH FINE FOR IMPORTING OF ILLEGALLY HARVESTED TIMBER
BIFA on 6th March reported that British timber operator Hardwood Dimensions (Holdings) Ltd has been fined £4,000 for breaching regulations prohibiting the importing and sale of illegally harvested timber. he fine marked the first enforcement action carried out by the Government’s new Office for Product Safety and Standards since its establishment earlier this year. Hardwood’s failed to check the legality of a batch of timber from Cameroon when placing it on the market, breaching regulations requiring businesses trading in timber and timber products in the UK to ensure that their products originate from legal sources.
The Office for Product Safety and Standards was created in January 2018 by the Department for Business, Energy and Industrial Strategy, to enhance protections for consumers and the environment and drive increased productivity, growth and business confidence.
https://www.gov.uk/government/organisations/office-for-product-safety-and-standards
EUROPEAN ANTI-CORRUPTION BODY CALLS PORTUGAL’S PROGRESS “UNSATISFACTORY”
The Council of Europe’s Group of States against Corruption (GRECO) body on 6th March published a report which assesses Portugal’s compliance with the recommendations issued by GRECO in an evaluation report adopted in 2015, and concludes that Portugal has only implemented satisfactorily 1 of 15 recommendations. 3 have been partly implemented and 11 have not been implemented yet. The situation is qualified by GRECO as “globally unsatisfactory”.
SOUTH SUDAN ACCUSED OF USING OIL CASH TO FUND CONFLICT
Defence Web on 6th March reported that activists accuse South Sudan’s government of funnelling cash from the state oil company to militias responsible for atrocities and attacks on civilians. South Sudan dismissed the report by The Sentry, a group co-founded by actor George Clooney. The Sentry said it had documents, including payment logs from state oil operator Nilepet, suggesting cash from the company was used to fund fighters in the country’s civil war.
UK NOTICE TO EXPORTERS 2018/05: CONSOLIDATED LIST UPDATED
On 6th March, the Department for International Trade advised of the publication of Notice to Exporters 2018/05 to advise that the consolidated list of strategic military and dual-use items that require export authorisation has been updated.
https://www.gov.uk/government/publications/notice-to-exporters-201805-consolidated-list-updated
FINCEN: MONEY TRANSMITTER RULES APPLY TO ICO DEVELOPERS AND EXCHANGES
Coindesk on 6th March reported that FinCEN has published a letter which was sent to U.S. Senator Ron Wyden last month, that indicates that it agency will apply its regulations to those who conduct initial coin offerings (ICO). It says that that both developers and exchanges involved in the sale of an ICO-derived token would be liable to register as a money transmitter and comply with the relevant statutes around AML and KYC rules.
https://www.coindesk.com/fincen-money-transmitter-rules-apply-ico-developers-exchanges/?src=ilaw
ANGOLA POLITICAL TRANSITION HITS SNAGS OVER CORRUPTION ALLEGATIONS
VoA reported on 6th March that Angola’s new president, Joao Lourenco, swept into power last year on a wave of promised reforms, both to the nation’s ailing economy and to the system of power and patronage built during decades of rule by President Jose Eduardo dos Santos. However, the tide of change may have hit some snags, analysts say, including due to recent corruption allegations involving the ex-president’s daughter.
MACEDONIA: EX ANTI-CORRUPTION CHIEF RESIGNS IN CORRUPTION SCANDAL
OCCRP on 6th March reported that the former chief of Macedonia’s anti-corruption commission has resigned from the country’s parliament after the publication of a damning audit that exposed corruption in the State Commission for the Prevention of Corruption.
https://www.occrp.org/en/daily/7735-macedonia-ex-anti-graft-chief-in-corruption-scandal?src=ilaw
US TREASURY INCREASES PRESSURE ON MEXICAN HEROIN TRAFFICKERS
On 6th March, a news release from the US Treasury reported that OFAC had increased its pressure on major Mexican heroin traffickers by targeting individuals and companies close to the new leadership of the Ruelas Torres drug trafficking organization (Ruelas Torres DTO) and imposed additional sanctions on 8 Mexican individuals and 8 Mexican companies linked to the Sinaloa-based criminal organisation.
https://home.treasury.gov/news/press-releases/sm0305?src=ilaw
CYPRUS HAS EARNED €5 BILLION FROM THE SALE OF CITIZENSHIP
Novinite on 6th March reported that over 10 years, 1,685 people have invested in exchange for Cypriot citizenship, and it has earned nearly €5 billion, according to BGNews. This includes Russian businessman Oleg Deripaska, and is one of the hundreds of wealthy Russians and Ukrainians who have received Cypriot citizenship.
CANADA: 4 MEN CHARGED IN ‘SOPHISTICATED’ $17 MILLION MORTGAGE FRAUD
On 6th March, the Toronto Sun reported that 4 men are facing charges for alleged mortgage fraud targeting a high-end neighbourhood in the city. Mortgages were to be secured for properties but they were never registered and were misrepresented to the lenders, police say. Fake title and home insurance policies were given to lenders to secure the funds.
http://torontosun.com/news/local-news/four-men-charged-in-sophisticated-mortgage-fraud?src=ilaw
BEAUFORT SECURITIES ADMINISTRATORS FREEZE £800 MILLION IN CLIENT ASSETS
Reuters on 6th March reported that administrators for insolvent UK broker Beaufort Securities have frozen almost £800 million in client assets, and don’t expect to return any before mid-April. Beaufort was placed into insolvency amid concerns over its financial health and its alleged role in a US criminal investigation into a more than $50 million stock fraud and laundering scheme.
NEW YORK DEPARTMENT OF FINANCIAL SERVICES 4 NEW CYBERSECURITY FAQ
On 6th March, Robinson & Cole Data Privacy reported that, on 1st March, the NYDFS “cybersecurity regulations” came into force. It reports that, to aid with compliance with the regulation, the NYDFS recently added new guidance, updating its FAQ. The 4 new questions are detailed in the article.
https://www.jdsupra.com/legalnews/new-york-department-of-financial-71680/
ROMANIAN ARMY LAND USED BY NATO OWNED BY FRIENDS AND KIN OF SYRIAN DICTATOR
OCCRP reported on 6th March that land belonging to a Romanian military base used by NATO for sensitive training exercises is actually owned by influential Syrian businessmen related or connected to Bashar al-Assad. Capu Midia, the military base at issue, is in active use. The article claims that a third of the restricted military area – about 130 of its 422 hectares – was bought up years ago by Horaizing SRL, a company controlled by Syrians close to Assad. Horaizing, originally called Landwood Company SRL, was set up in 1999 in Comanesti, a small town in eastern Romania known for its forestry industry. One of its co-founders was Haytham A. Asaad (no relation to the Syrian president), head of the Syrian Businesspeople’s Association in Romania. In early 2009, the son of Syria’s ambassador to Romania, became the company’s largest shareholder, and his shares were later taken over by the ambassador’s wife. In 2014, the largest shareholding was acquired by Delos Offshore SAL, a company registered in Lebanon, and according to the Paradise Papers leak, Delos is connected through several associates to Rami Makhlouf, a cousin of Syrian President Bashar al-Assad, a major figure in Syria, and considered to be the richest man in the country.
CORRUPT POLICE IN PARAGUAY SEE OPPORTUNITY IN ILLEGAL LOGGING
Insight Crime on 6th March reports that authorities in Paraguay have arrested more than a dozen police officers for attempting to steal confiscated wood, underscoring the attractiveness of Latin America’s illegal logging industry for opportunistic corrupt law enforcement as well as criminal networks. The website says that the arrests in Paraguay highlight a perennial regional problem — police corruption — as well as the relatively low risks and high rewards associated with illegal logging in Latin America.
https://www.insightcrime.org/news/brief/corrupt-police-paraguay-illegal-logging/
SERBIAN ARMS DEALER LOBBIES FOR REMOVAL FROM US BLACKLIST
Balkan Insight on 5th March reports that Serbian arms dealer Slobodan Tesic, who was put on a blacklist of alleged human rights abusers and people involved in corrupt activities around the world by the US authorities, has hired a Washington-based lobbying company to help him get his name removed from the list.
ILLEGAL, UNREPORTED AND UNREGULATED (IUU) FISHING – REPUDIATION OF EU-COMOROS FISHING AGREEMENT
A briefing paper from the EU Parliament Research Service follows the listing of the Comoros as a non-co-operating country in fighting illegal, unreported and unregulated (IUU) fishing. The EU Commission has initiated the termination of the EU-Comoros fisheries agreement. The EU Parliament’s consent, requested for this first-ever denunciation of a fisheries agreement on grounds of IUU fishing, will be subject to a plenary vote planned for the March plenary session.
http://www.europarl.europa.eu/RegData/etudes/ATAG/2018/614728/EPRS_ATA(2018)614728_EN.pdf
CRIMINALS JAILED OVER £37 MILLION COPYCAT WEBSITE SCAM
On 6th March, KYC 360 reported that members of a criminal gang that created copycat websites of key government departments and mislead consumers to pay more for services than they should have been sentenced to a total of more than 35 years. The group is said to have defrauded the public out of over £37 million, making it one of the largest UK online crime cases, according to the National Trading Standards (NTS) – which explained that they operated a number of ‘copycat websites’, impersonating official government services to sell passports, driving licences and other key documents for vastly inflated prices.
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