7th March 2018
US SANCTIONS NORTH KOREA FOR KILLING OF LEADER’S HALF-BROTHER WITH VX
On 7th March, Zawya reported that the US, on 22nd February, has determined Pyongyang used the chemical warfare agent VX to assassinate the half-brother of North Korean leader in Malaysia in 2017 and has imposed sanctions in response, the US State Department said. The prohibitions pursuant to the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 appeared largely symbolic, such as sales to North Korea under the Arms Export Control Act and barring the export of national security-sensitive goods and technology to North Korea, and took effect from 5th March.
IMPACT OF BLOCKADE ON QATAR FADING, SAYS IMF
On 6th March, the Gul Times carried a story saying that the direct economic and financial impact of the diplomatic rift on Qatar is fading, according to the IMF. After undertaking a formal mission, or review, of the country, the IMF found that. 9 months into the blockade imposed by its Gulf neighbours, Qatar has swiftly strengthened its maritime diplomacy by establishing direct shipping lines with Turkey, Oman, Iran, India, China, Taiwan, South Korea and Malaysia, while plans are afoot to establish direct shipping lines from to the North Africa region, including Tunisia and Morocco. The IMF also found that the Qatari authorities are increasingly focusing on enhancing AML/CFT effectiveness and strengthening anti-corruption regimes.
CORRESPONDENT BANKING: SOUND MANAGEMENT OF RISKS RELATED TO MONEY LAUNDERING AND FINANCING OF TERRORISM
One of the documents referred to by the Basel Committee on Banking Supervision, FATF and others in the announcement of industry initiatives to facilitate correspondent banking, which has been affected by a decline in the number of correspondent banking relationships due to de-risking and AML/CFT concerns, was this June 2017 update including final revisions to Annex II – Correspondent banking and Annex IV – General Guide to Account Opening (issued for consultation in November 2016) of the Basel Committee’s general guidance material.
CAYMAN ISLANDS’ AML REGIME UPDATED
On 5th March, a briefing from Appleby is concerned with changes made to the Cayman AML/CFT regime, highlighting the key changes.
NEW LESSONS TO COUNTER HUGE RISE IN YOUNG PEOPLE INVOLVED IN MONEY-LAUNDERING
The Times Educational Supplement on 7th March reported that there has been a 275% rise in the number of under-21s acting as money mules (i.e. individuals who allow their bank accounts to be used to facilitate the movement of criminal funds) in the UK, whether wittingly or unwittingly. It reports that a new personal, social, health and economics (PSHE) education anti-fraud resource, aimed at secondary school pupils, is therefore being published, in an effort to prevent this from happening.
The PSHE Association Anti-Fraud Education is at –
A COUPLE OF JARGON TERMS LINKED TO CORRUPTION IN CHINA
On 7th March, Quartz provided an introduction to the meaning of 2 terms used in China, where reportedly nearly 2% of its GDP may have been lost to capital flight in the first 3 quarters of 2017. Wealthy Chinese are so fond of setting up shell firms in the jurisdiction that “to have a ‘BVI’ became shorthand in China for any offshore company, regardless of where in the world it was located; and a “white glove” is an intermediary who launders your money; they handle the dirty deeds, while you keep your hands clean. “White gloves” are often well-connected Westerners.
CORRUPTION CLAIM SHAKES LONDON ART MARKET
The Times on 7th March reports on Matthew Green, 50, son of one of the London art world’s most powerful dealers, being charged by the US DoJ in connection with alleged money laundering. It is claimed that he offered to use the sale of a Picasso to launder dirty money. This could prove embarrassing for his family, it says. His father, Richard Green, 81, owns what is reputed to be one of the biggest, if not the biggest, stocks of fine art in Britain.
AUSTRIAN REGULATOR WARNS BANKS ON BITCOIN
On 6th March, Cryptovest reported that the FMA, Austria’s financial regulator, has sent a letter to banks in the country, warning them to ensure adherence to AML rules when it comes to digital currency dealings. Because of the risks associated with such dealings, it says, banks must “pay special attention and take additional measures if needed to recognise such transactions, validate them and review the origin of the funds.”
Meanwhile, International Adviser highlights the comment in the SRA review that law firms are an obvious target for money launderers.
CHINA’S ‘BLUE SKY 2018’ CAMPAIGN AIMS TO STOP IMPORTED WASTE
ECNS on 7th March carried an article saying that the General Administration of Customs has launched a “Blue Sky 2018” campaign from March to December, aimed at cracking down on the import of “foreign garbage”, the People’s Daily reported. The campaign will seek to prevent waste from other countries being smuggled into China, by sea or land transportation. A total of 24 types of imported waste, including plastic and mixed paper, will be the main targets in the campaign.
14 NETTED IN GUANGZHOU SEAFOOD SMUGGLING BUST IN CHINA
Xinhua on 7th March reported that customs staff in China have confiscated 20 tonnes of the products worth $15.8 million. An investigation began after police received a tip-off in the first half of 2017, and the suspects brought pomfret, mackerel and white prawns from Ecuador, Indonesia and some African countries to the Chinese mainland.
UN TRADE SANCTIONS PANEL REPEATEDLY HACKED
On 6th March, the Chicago Tribune reported that the UN panel enforcing trade sanctions against North Korea has been hacked repeatedly by a “nation-state actor,” compromising the email accounts of 4 current or former members of the panel and a “considerable number” of email messages, according to a UN incident report – a heavily redacted draft of a forthcoming report from the UN Panel of Experts, which includes the UN account of the attack, having been seen by the Washington Post.
INDIA: 28 CASES IN 2 YEARS OF AIRLINE STAFF INVOLVED IN SMUGGLING
The Economic Times on 6th March reported that there were a total of 28 incidents of airline employees involved in smuggling of foreign currency, gold and other contraband in the last 2 years, the Indian government told Parliament. However, it is claimed that such incidents have dropped by 60% in 2016-2017 as compared to the previous year. he government also told Parliament that it takes various steps to prevent these incidents, such as sensitising field staff, issuing alerts and gathering and sharing of intelligence.
INDIAN FORMULA ONE TYCOON VIJAY MALLYA’S SUPERYACHT IMPOUNDED OVER WAGE DISPUTE
The Gulf Times and Guardian have both reported that a $93 million, Isle of Man-registered superyacht, the 95-metre Indian Express owned by Indian multimillionaire Vijay Mallya has been impounded in Malta in a dispute over the businessman’s failure to pay the crew more than $1 million in wages. It was boarded by port officials and prevented from leaving Malta. He was arrested in London last year over allegations he supported his F1 team with laundered cash, and is currently fighting extradition to India.
PROPOSAL FOR AN EU REGULATION ON THE IMPORT OF CULTURAL GOODS
In the 16th Report of the European Union Scrutiny Committee of the House of Commons, the Committee detailed its concerns and other observations about the EU Commission proposal of July 2017 for a new customs regime under which cultural goods would be subject to an import licence (for artefacts considered most at risk, such as parts of ancient monuments) or a self-certification system, affirming the legal exportation of the goods before they could enter the EU for free circulation. Amongst other things, the Committee notes that it is unlikely the new Regulation would be agreed in time for entry into force by January 2019, as envisaged by the European Commission.
US INTELLIGENCE CHIEF SAYS MORE RUSSIAN SANCTIONS IMMINENT
London South East on 7th March reported that further sanctions to punish alleged Russian meddling in the 2016 US elections could be imposed shortly, the top US intelligence official said. CAATSA, a law passed last year by the US Congress imposed sanctions on Russia, but the Trump administration has yet to formally designate targets for the measure.
“WOLF OF WALL STREET” PRODUCER TO PAY $60 MILLION IN 1MDB CASE
The Star Online on 7th March reported that Red Granite Pictures has agreed to pay $60 million to the US government in order to resolve allegations that it profited from the massive Malaysian corruption scandal involving the Malaysian state-run development fund.
EX-CEO GETS 25 YEARS FOR $179 MILLION FRAUD
On 6th March, Law 360 reported that Nikesh Patel, the former CEO of First Farmers Financial, who admitted to running a $179 million scheme through the sale of loans he falsely claimed had US Department of Agriculture backing, has been sentenced to 25 years in prison.
UK TO INTRODUCE OVERSEAS BENEFICIAL OWNERSHIP REGISTER IN 2021
On 6th March, law firm Gowling WLG reported that the UK Government had announced that a public register revealing the ultimate owners of overseas legal entities buying property in the UK will be launched in early 2021.
THE MIDDLE EAST IS MARCHING TOWARDS ISRAEL’S NUCLEAR NIGHTMARE SCENARIO
On 28th February, Haaretz originally published an article which says that Israel is being surrounded by civil nuclear programmes on all sides and, whilst there is no immediate danger, and it would take many years, possibly decades, to turn these programmes into military ones, the technological clock may have begun ticking. Moreover, these programmes may undermine the relative regional stability gained by the Iran nuclear deal.
SURVEILLANCE AND THE STATE IN AUSTRIA
On 5th March, the Oxford Faculty of Law published a paper highlighting plans by the new right-wing Austrian government for a “security package” which includes a wide range of intrusive surveillance measures: the police-use of private real-time CCTV footage and data from highway control, increased use of ISMI-catchers to localise mobile phones, a prohibition of anonymous pre-paid SIM cards, retention of telecommunications data, easier police access to private letters, and more. The most controversial part, the article argues, is the introduction of government malware, a so-called State Trojan (Bundestrojaner).
“HUGE RISE IN BRITAIN’S SECRETIVE ARMS SALES TO SAUDI ARABIA”
On 5th March, the Middle East Eye carried this article which claims that the UK has been accused of concealing the true extent of its support for Saudi Arabia’s bombing campaign in Yemen by overseeing a vast rise in the use of “secretive” arms exports licences. It says that figures seen exclusively by Middle East Eye show that the government has actively overseen a more than 75% increase in the use of secretive “open licences” to approve additional arms sales to the kingdom, including vital parts for the jets striking targets in Yemen [note: such licences are neither secret nor limited to use by the Saudis. Anyone who meets the conditions of the licence may use it, but have to register use of the licence with the UK Export Control Joint Unit]. The article claims that use of them is difficult to track and allow for multiple consignments of arms to be sent to the same destination without public scrutiny or parliamentary oversight.
LOCKHEED: ARTIFICIAL INTELLIGENCE, 3D PRINTING WILL COMPLETELY CHANGE SPACE INDUSTRY
The Air Force Magazine in the US on 5th March carried an article saying that artificial intelligence, smaller, cheaper, and re-programmable satellites, and 3D or additive manufacturing will combine to drive big changes in the space industry, Lockheed Martin’s chief space executive reported. In ground-based manufacturing, he said, 3D is already cutting costs and accelerating delivery times. Propellant tanks that used to take 2 years to make are now being printed in 2 months, he said, and the quality of manufacturing will also rise.
UK: PRIVILEGE IN INTERNAL INVESTIGATIONS
On 7th March, Baker McKenzie reviewed the position and identifies 6 aspects of any investigation that companies will need to consider carefully in light of the recent Bilta judgment. The article follows the decision in that case, meaning that it remains open to parties to claim litigation privilege over documents created during an internal investigation conducted against the backdrop of a criminal investigation. This represented a different approach to that taken in SFO v ENRC, a decision which casts doubt on the extent of protection available under litigation privilege in those circumstances.
UNEXPLAINED WEALTH ORDERS, WHAT YOU CAN DO IF ONE LANDS ON YOU
On 7th March, law firm Rahman Ravelli carried an article asking questions, such as “But what exactly are UWO’s? And what purpose do they serve?”.
HOW EFFECTIVE IS AUSTRALIA’S NEW FOREIGN BRIBERY LAW LIKELY TO BE?
On 7th March, KYC 360 published an article which says that Australia has had criminal laws prohibiting the bribery of foreign public officials in place for many years, but it has successfully convicted individuals in connection with foreign bribery on only 2 occasions. After OECD criticism in 2015, the federal government has taken steps to increase the resources available to police and prosecutors, and reform how foreign bribery offences may be investigated, and to implement those changes, the federal government has proposed 3 key reforms worth noting. The article concludes that in some respects, the proposed legislation misses opportunities – for example, there are no provisions to reward whistleblowers, and it does not criminalise private sector bribery (B2B bribery) overseas.. Neither do the proposals anticipate a harmonisation of public sector and private sector (B2B) bribery laws at state and federal level.
SPANISH CUSTOMS BOATS ATTACKED: EVIDENCE OF GIBRALTAR STRAITS DRUG SMUGGLING PROBLEMS
The Gibraltar Chronicle on 7th March reported that a group of masked men tried to set fire to 2 new Spanish customs patrol boats in the port of Algeciras, just hours after an off-duty Guardia Civil officer was attacked by smugglers in La Linea – which has highlighted the scale of drug trafficking in the Campo de Gibraltar.
TRANS-PACIFIC PARTNERSHIP AGREEMENT CPTPP – THE GOLD STANDARD WITHOUT THE UNITED STATES
In the March 2018 edition of its International Trade Compliance Update, Baker McKenzie reports that the 11 remaining parties to the Trans-Pacific Partnership Agreement (following the withdrawal of the US) have set March 8th as the date for signing the successor to that agreement, the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP). It provides a synopsis of what has changed in the new agreement and an overview of opportunities for businesses operating in the CPTPP area. Many of the benefits related to tariff reduction, non-tariff barriers to trade and transparency remain in the agreement. It also says that the rules of origin that will be applicable to trade in goods will provide opportunities for many businesses in the region.
THE GLOBAL IMPACT OF A TERRORIST NUCLEAR ATTACK: WHAT WOULD HAPPEN, AND WHAT SHOULD WE DO?
On 21st February, an article appeared in the Bulletin of Atomic Scientists which asks – what if terrorists were to build a dirty bomb that contained radioactive materials instead of bits of metal shrapnel, and set it off in a major city? Or, worse, what if they managed to build a fully functioning nuclear weapon, cart it to the downtown of a city, and then detonate it? Access to the document is available for $20 for 24 hours access.
MONEY LAUNDERING SUPERVISION: GUIDANCE FOR MONEY SERVICE BUSINESSES (MSB) FROM HMRC
Also on 7th March, HMRC issued updated guidance containing background information and detailed guidance to enable money service businesses meet their obligations including customer due diligence and record keeping.
MONEY LAUNDERING SUPERVISION: GUIDANCE FOR HIGH VALUE DEALERS (HVD) FROM HMRC
Also on 7th March, HMRC issued updated guidance containing background information and detailed guidance to enable HVD meet their obligations including customer due diligence and record keeping.
CANADA REVENUE AGENCY ORDERED TO PAY COUPLE NEARLY $1.7MILLION FOR ‘MALICIOUS’ PROSECUTION
The Huffington Post on 7th March reported that a Vancouver Island couple has been awarded nearly $1.7 million in damages after a judge criticised the Canada Revenue Agency for the “ruination” of their business and personal lives by “high-handed, reprehensible and malicious” actions, and were the victims of an “egregious” prosecution based on unfounded theory and suspicion about alleged tax evasion at the couple’s restaurant and other businesses, having targeted them despite lacking any direct evidence of wrongdoing.
VENEZUELA’S NATIONAL ASSEMBLY DECLARES PETRO UNCONSTITUTIONAL
CCN on 7th March reported that Venezuela’s national assembly recently declared it believes the country’s oil-backed cryptocurrency, the “Petro” is unconstitutional. It reports that a public statement denounced the cryptocurrency as a fraud, and a threat to those who invest in it. In the statement, the lawmakers criticised the cryptocurrency’s token sale in general, which reportedly already raised $735 million.
FORMER SOUTH KOREAN PRESIDENT SUSPECTED OF BRIBERY
OCCRP on 7th March carried an article saying that a former South Korean president, Lee Myung-bak (who served as president from 2008 to 2013) is being summoned on allegations of bribery by prosecutors currently investigating high-level political corruption in the country, according to a Reuters report. It says that another “culprit” in the extensive corruption investigation is Samsung electronics. Prosecutors raided their Seoul offices last month to look for evidence that the company funded DAS, an auto-parts business run by Lee’s family. Samsung has not released a comment.
PALM OIL BUSINESSMAN INDICTED FOR GRAFT IN INDONESIA
The Jakarta Post on 7th March reported that Corruption Eradication Commission (KPK) prosecutors have indicted a businessman in a bribery case related to the issue of palm oil plantation permits in a province in Indonesia’s part of Borneo Island with a long history of deforestation. Hery Susanto Gun, president director of palm oil firm PT Sawit Golden Prima, was indicted for allegedly bribing suspended Kutai Kertanegara regent Rita Widyasari with $436,363 to issue a business permit for the former’s 16,000 hectares of palm oil concession in the regency.
THE TEST OF DISHONESTY MAY BE QUESTION FOR PARLIAMENT
The Law Society Gazette on 7th March reported that the president of the UK Supreme Court has said further questions on what constitutes dishonesty sparked by the court’s decision that a professional gambler cheated his way to a multi-million casino win may be best answered by parliament and not judges and juries. She also noted that legal commentators have argued that the first arm in the Ghosh test used to determine if dishonesty is involved is wrong. That test, defined after the 1982 ruling in R v Ghosh, asks juries to consider whether the defendant would have realised that ordinary honest people would regard their behaviour as dishonest.
BINARY OPTIONS AND STOCK-RELATED FRAUD TOP THE LIST OF WARNINGS ISSUED BY SWEDEN’S FINANCIAL MARKETS REGULATOR IN 2017
Finance Feeds on 7th March reported that the annual report published by the Swedish financial markets regulator makes it clear that binary options were among the key reasons for issuing warnings in Sweden last year.
FOREX FRAUDSTER PLEADS GUILTY TO PERVERTING THE COURSE OF JUSTICE
FT Adviser reported on 7th March that a foreign exchange fraudster has pleaded guilty to perverting the course of justice. Alex Hope had been jailed for 7 years in 2015 for fraud and operating a unauthorised collective investment scheme. Then, in November he was charged with perverting the course of justice over his conduct following the imposition of a restraint order in 2012 and a confiscation order in 2016.
SCOTTISH MAN IMPORTED COCAINE IMPREGNATED INTO CARDBOARD
On 7th March, the NCA issued a news release saying that Vincent Dolan, 42, from Clydebank, who smuggled cocaine worth more than £100,000 into the UK has been jailed for 5 years and 3 months following an investigation by the NCA. 2 packages were found to contain cocaine which had been impregnated into cardboard.
“MOSSACK FONSECA FORMED BVI FRONT COMPANIES FOR NORTH KOREA”: CLAIM
On 7th March, Kenneth Rijock in his blog claimed that in a Criminal Complaint filed in US District Court in New Jersey against a Chinese trading company alleged to be the front for a sanctioned North Korean bank, Korea Kwangson Banking Corp., is the allegation that Panamanian law firm of Mossack and Fonseca formed 3 BVI corporations, to act as additional intermediaries for the North Korean bank.
REPORT SHOWS EXTENT OF ENDANGERED ANIMAL TRADE BETWEEN AFRICA AND ASIA
On 7th March, CNN reported on a report from conservation group Traffic, that claims that as many as 41 countries and territories in Africa were involved in the export of live animals, plants and animal products to 17 different countries across Southeast East and East Asia. Traffic found that more than 50 tons of Hippopotamus teeth were exported from Uganda and Tanzania; Namibia exported the highest number of mammal skins, mostly from Cape Fur Seals; and South Africa was the biggest single exporter of both live birds and mammals, as well as plants. More than 1.3 million live animals and plants, 1.5 million skins and two thousand tonnes of meat were exported from a wide range of African countries, and while species raised in captivity made up an increasing proportion of exported specimens.
THAI BUSINESSMAN ARRESTED, SUSPECTED OF FINANCING DRUG RINGS
Phuket News reported on 7th March that a Thai-Indian businessman, Harpreet Singh, was arrested on suspicion of financing major local and transnational drug-trafficking networks, as associated raids were carried out on 30 premises nationwide, police said. The investigation was being expanded to include drug networks in Thailand and some neighbouring countries believed to have also been financed by Harpreet. The claim is that he hid his alleged illegal activities behind businesses offering tailor-made suits, buildings for rent and money lending
RECORD NUMBER OF INTELLECTUAL PROPERTY RIGHTS SEIZURES FOR US CUSTOMS IN FY 2017
On 5th March, US Customs and Border Protection reported that a record number of 34,143 shipments of goods that violated Intellectual Property Rights (IPR) in FY2017 were seized. The total estimated manufacturers’ suggested retail price (MSRP) would have been $1.2 billion had the products.
MARITIME RISKS REVIEW 2017
Control Risks has published its full review of maritime risks in 2017, which includes the following – 5% decrease in global maritime security incidents; 25% of piracy incidents took place in the Gulf of Guinea; 83% decrease in kidnap incidents in SE Asia; Spike in Somali piracy and a new threat off Yemen; and 2-fold increase in incidents off Venezuela.
WEAPONS SEIZURES FROM HELL’S ANGELS IN BELGIUM
As if Belgium didn’t have enough to worry about from ISIS attacks etc, federal police have arrested 12 people after a raid on the club houses of the Hells Angels. The police also took a weapon arsenal (illustrated in the article). The raids are part of a large-scale study of motorcycle gangs in Limburg.
NAVIGATING CHINA’S NEW ‘BELT AND ROAD’
Ince & Co on 7th March carried an article saying that China has invested $20 billion in new ports across the globe over the past 12 months. Ton Van Den Bosch spoke to The Marine Professional to explain how this has created great commercial opportunities but also some wider concerns, and the interview can be found here –
VIRTUAL CURRENCIES ARE COMMODITIES, US JUDGE RULES
KYC 360 on 7th March reported that a US federal judge has ruled that virtual currencies like bitcoin can be regulated as commodities by the US Commodity Futures Trading Commission. He ruled that the CFTC had standing to bring a fraud lawsuit against New York resident Patrick McDonnell and his company Coin Drop Markets, allowing the case to go forward.
REPORT ON VIOLENCE AND TENSION IN CENTRAL MALI
The Stockholm International Peace Research Institute on 7th March published a new briefing on central Mali: violence, local perspectives and diverging narratives. Violence in Mali erupted in 2012. Early analyses of the conflict that erupted in Mali in 2012 focused on the dynamics affecting the three northern regions of Mali (Tombouctou, Kidal and Gao). However, since 2015, the central region of Mopti has been in the spotlight due to the dramatic increase in violence targeting security forces, elected or traditional officials, market places and schools. The study explores how the Malian authorities and the international actors who intervened following the crisis of 2012 have struggled to effectively evaluate the threats and adequately respond to the emerging dynamics. The emergence of Malian jihadist actors; ongoing intra- and inter-community conflict dynamics; and the connection of governance, development and security make the design of a response extremely complex.