16th March 2018
SAUDI ARABIA WILL SEEK NUCLEAR BOMB IF IRAN GETS ONE
Asia One and others on 16th March reported that Saudi Arabia’s powerful crown prince says the kingdom would pursue a nuclear weapon if its regional rival Iran obtains one, raising concerns about nuclear proliferation at a time when the Saudis are seeking foreign technology for their nuclear energy programme, including from the US. In an interview with CBS, Crown Prince Mohammed bin Salman said Saudi Arabia is not actively pursuing a nuclear weapon, but that could change suddenly, and it has plans to build 16 nuclear power reactors within 25 years, according to the World Nuclear Association.
LIBYAN AUTHORITIES IMPOUND FOREIGN FUEL SMUGGLING TANKER
Various news media reported on 16th March that the Libyan navy had seized a foreign tanker carrying the flag of Togo with 8 (reportedly Greek) crew members on board for smuggling fuel off the coast of Zwara, some 120 km west of the capital Tripoli.
NARCO BOATS: THE LEGAL WEAPON OF THE SPANISH DRUG TRADE
El Pais on 15th March reported that drug traffickers are willing to pay up to €180,000 for speedboats to sneak in tons of hashish, and describes one boatyard in Cadiz that gave up legitimate sales to concentrate on the more lucrative business. It describes the ideal boat as having a long and narrow hull that can be up to 12 meters long, a rudder that can be steered standing up, 3 or 4 seats for the crew, and enough space in the front loading area for up to 2.5 tonnes of hashish. 3 outboard motors with 250 hp, from a Japanese brand well appreciated by drug traffickers, power the boats at 62 knots, around 120 kmh.
SHAMED SHEERNESS DOCKERS £8,000 CONFISCATION ORDER FOR CIGARETTE SMUGGLING
Kent Online on 15th March reported that 2 dockworkers who smuggled cigarettes from a ship by hiding them in bags of rubbish and were caught red-handed with 32,600 Marlboro and L&M, have been ordered to pay back more than £8,000 or go to jail.
SHELL COMPANIES, THE ROLE OF COMPANY AND TRUST SERVICE PROVIDERS, AND ALTERNATIVE BANKING PLATFORMS HIGHLIGHTED IN NZ POLICE MONEY LAUNDERING REPORT
The Interest website in New Zealand carried an article on the recent national risk assessment published by the FIU. It quotes a Ron Pol, a political scientist specialising in policy effectiveness who recently completed a PhD in anti-money laundering, who describes the national risk assessment report as refreshingly honest.
FATHER AND SON, WITH TIES TO ALASKA, CHARGED IN $1 BILLION LAUNDERING CASE LINKED TO IRAN
KTUU on 15th March reported that a Mitchell Zong, 45, was charged by US federal authorities with conspiracy to commit money laundering. His father and former Anchorage resident, Kenneth Zong, had previously been charged. In December 2016, Kenneth Zong was charged – on 47 counts – for his alleged role in a scheme to provide services to Iran, which dates back to 2011. Those charges were said to involved restricted accounts that held funds in South Korea, where Kenneth Zong had relocated. The money was later transferred to more than 10 countries including the US, UAE, Italy, Germany, Switzerland, Austria, France, Canada, Bahrain and Netherlands. A company called “Anchore.” was used to unlawfully convert and distribute Iranian funds into US currency and euros through fictitious trade in construction supplies and marble tiles with an Iranian-controlled shell company called, “MSL & Co. Investment Trading”
SWISS PARLIAMENT REJECTS CALL TO RETURN 1MDB-LINKED FUNDS TO MALAYSIA
The Star in Malaysia on 15th March reported that Switzerland’s parliament has rejected a bid to amend the law handling bank profits seized by authorities that had aimed to return more than $100 million linked to scandal-hit sovereign fund 1Malaysia Development Berhad (1MDB) to Malaysia. It seems that confiscated bank profits from dubious deals normally they flow into the general Swiss budget – whereas funds misappropriated by state officials and leaders are normally returned to the country of origin.
NEWLY INTRODUCED US SANCTIONS BILL WOULD TARGET IRGC
US law firm Steptoe & Johnson on 14th March published a briefing on bipartisan legislation targeting Iran’s Islamic Revolutionary Guard Corps (IRGC). The new Bill – the Iranian Revolutionary Guard Corps Economic Exclusion Act – seeks to expand sanctions against the IRGC and push the administration to more robustly implement already existing sanctions. In addition to officials, agents and affiliates of the IRGC, who can already be designated, the Bill would allow for targeting entities owned or controlled by the IRGC, and foreign persons in which the IRGC has an ownership interest in such foreign person of less than 50%. The briefing notes that, if passed, this change could lead to a significant number of new designations and could complicate compliance for companies seeking to avoid entities which might become subject to US sanctions. Other changes that would be made by the Bill would extend the scope of existing in other areas, including reducing the monetary level of financial transactions that would be liable to controls, and requiring a report identifying entities owned 33% or greater by the IRGC.
WHAT ARE THE RISKS OF DOING BUSINESS WITH RUSSIAN OLIGARCHS LIST AND RUSSIAN DEFENCE AND INTELLIGENCE LIST?
On 16th March, Arent Fox produced a briefing following announcements by the Trump Administration in January re –
- the Russian Oligarchs List – a list of Russian senior political figures and oligarchs submitted to the US Congress (as required by section 241, CAATSA); and
- the Russian Defence and Intelligence List – a list of parties published in October 2017 that are a part of, or operate for or on behalf of, the defence or intelligence sectors of the Russian government (re section 231, CAATSA).
Neither of these resulted in further sanctions designations.
However, Arent Fox recommends that companies engaging in business in Russia should conduct due diligence to determine whether any person on the Russian Oligarchs List owns or controls 50% or more of an existing or potential business partner. If they do, a careful risk assessment should be conducted to see whether to proceed with future business and what measures, such as contract provisions, might allow them to exit from the contract or relationship if the oligarch is subject to actual sanctions in future.
The firm also recommends that companies selling to or purchasing from entities on the Russian Defence and Intelligence List must check what they are buying and selling. Is it a defence or military article or service? Is the value of the transaction large? If so, there is a substantial risk of secondary sanctions on the company doing the transaction.
SERBIA HAS NOT IMPLEMENTED ANY OF THE RECOMMENDATIONS ON PREVENTING CORRUPTION AMONG PARLIAMENTARIANS, JUDGES AND PROSECUTORS
The Council of Europe on 15th March reported that Serbia has not implemented in a satisfactory manner any of the 13 recommendations provided by the anti-corruption body GRECO (Group of States against Corruption) to the country in 2015, according to the new compliance report.
RUSSIAN BILLIONS SLIP THROUGH LATVIA’S LOOSE NET
A Reuters “exclusive” on 16th March is concerned with Latvia’s banking sector, which reports that Latvia launched just 85 money-laundering investigations in 2017 even though its banks flagged 17,900 suspect transactions, highlighting the challenge the Baltic state faces in repairing its tarnished reputation. It also reports that, in 2017, only 225 files were forwarded to Latvian enforcement authorities, or 1% of the transactions flagged, according to the government data seen by Reuters. It says that since securing independence from Russia in 1991, more than a dozen Latvian banks have promoted themselves as a gateway to Western markets for clients in Russia and former Soviet states such as Ukraine – and promised Swiss-style secrecy for clients. The IMF warned in 2007 that Latvia had a reputation for lax due diligence in opening bank accounts and OECD criticised the country in 2015 for failing to do enough to tackle financial crime and money laundering.
NEW ZIMBABWE MONEY LAUNDERING BILL
NewsDay on 16th March reported on the Money Laundering Bill, which amends several pieces of legislation in order to achieve the enactment of a comprehensive legal framework to combat money laundering and terrorist financing. In particular, the Bill seeks to implement the UN International Convention for the Suppression of the Financing of Terrorism and the FATF 40 Recommendations. The article says that It is estimated that $5 billion could have been siphoned out of the country since dollarisation in 2009 – equivalent to over 30% of the country’s annual GDP. The FIU at the Reserve Bank of Zimbabwe will be given enhanced powers and resources to monitor suspicious transactions in the financial sector and report the findings to law enforcement authorities.
EX-SIEMENS OFFICIAL PLEADS GUILTY TO US$100 MILLION BRIBERY SCHEME
The Straits Times on 16th March reported that an elderly former Siemens executive, Eberhard Reichert, a German national who evaded authorities for 6 years has pleaded guilty in the US to conspiring to pay US$100 million in bribes to Argentine officials, for years he signed off on false invoices from a sham consulting firm to free up cash for the bribes. This was part of a scheme to land a $1 billion contract to produce Argentina’s state-of-the-art national identity cards, which Siemens won in 1998.
BLACKBURN TOBACCO TAX FRAUDSTER ORDERED TO REPAY £478,000
The Lancashire Evening Post on 16th March reported that former postmaster Iqbal Haji, the jailed ringleader of an illegal cigarette network in Blackburn has been ordered to pay back £478,693 within 3 months, or face a further 4 years behind bars and still owe the money. He was jailed for 6 years in May 2016 following an investigation by HMRC.
YUKOM’S CEO LEE ELBAZ – FINANCE FEEDS LOOKS AT THE BINARY OPTIONS FRAUD CASE
On 16th March, Finance Feeds scrutinised Maryland District Court filings in the case brought by the US against Lee Elbaz (aka Lena Green), the Israeli CEO of notorious binary options call centre, Yukom Communications, who was arrested in September 2017.
RUSSIAN AVANT-GARDE FORGERY CASE ENDS IN CONVICTIONS AND DISAPPOINTMENTS
The Guardian on 16th March reports on a German case that it was hoped would help crack down on a market many fear is awash with fakes. A dispute between 2 divorced art historians left judges unable to decide whether many disputed works were genuine or fake. Police arrested the Israeli and German-Tunisian defendants of the Wiesbaden-based gallery SNZ Galeries in 2013 after a tip-off from Israeli intelligence, when it was hailed as one of the biggest swoops against organised art crime in recent German history. Fraud was alleged in the sale of forged works by leading lights of the Russian avant-garde.
INDUSTRIAL-SCALE ILLICIT CIGARETTE FACTORY DISMANTLED IN COUNTY LOUTH IN IRELAND
Shelf Life on 15th March reported on an illegal tobacco factory producing counterfeit cigarettes in Jenkinson, Co. Louth – the first time a commercial illicit cigarette production plant was discovered in Irish Republic. 11 men, all from Eastern Europe and ranging in ages from their late 20s to late 50s, were arrested by Gardaí. Revenue officers found more than 40 tonnes of tobacco, all the pre-cursor components for the manufacture of cigarettes, and approximately 25 million cigarettes, branded ‘Mayfair’, ready for distribution.
COMPULSORY LIQUIDATION OF A COMPANY IN UK
On 15th March, the House of Commons Library produced a useful briefing that provides an outline of the compulsory liquidation process in respect of an insolvent company. The paper deals with procedures open to an insolvent company – Administration; Company Voluntary Arrangement (CVA); Scheme of Arrangement; Administrative Receivership; Creditors’ Voluntary Liquidation; and Compulsory Liquidation (or ‘winding-up’). The first 4 procedures provide the ‘potential’ for the rescue of the company or its business, while the last 2 do not.
THE CHEMICAL WEAPONS CONVENTION
This briefing paper was produced by the House of Commons Library on 15th March and looks at the Chemical Weapons Convention in the context of the attack in Salisbury in March 2018.
LEBANON’S FIRST OFFSHORE ENERGY CONTRACTS SPARK SECURITY, DIPLOMATIC DILEMMAS
The Middle East Eye on 16th March reports Lebanon’s attempts to explore offshore oil and gas fields in the Mediterranean that Israel has described as ‘highly provocative’. The contracts were originally agreed in January 2017 with a consortium of international oil giants – French Total, Italian ENI and Russian Novatek. The Lebanese offshore oil and gas has been a project long in the making, frequently halted by political tensions in the country. But the main issue now lies along its southern border with Israel, which has been extracting its offshore gas for several years.
SOMALIA BANS DUBAI PORTS OPERATOR FROM SOMALILAND
Al Jazeera on 15th March reports that MPs in Somalia have voted to declare a contract with the UAE null and void – endangering plans to develop a port in the Horn of Africa. Dubai-based shipping giant, DP World, wants to enlarge the port of Berberra in the breakaway state of Somaliland, but Somalia’s parliament has voted to ban the project, though the president of Somaliland has argued that his state has a right to enter into such agreements.
NOVICHOK: THE “NEW GUY” ON THE BLOCK
In the latest Arms Control Wonk podcast, the nerve agent said to have been used in the Salisbury, UK attack is discussed – described as “Super VX”. Not scheduled under the Chemical Weapons Convention, for reasons they discuss. “Novichuk” or Новичо́к means “newcomer” in Russian. The discussion also covers the implications for the Convention.
Science Direct carries information on Novichok –
COLOMBIA’S ‘INVISIBLES’ – THE NEW GENERATION OF DRUG TRAFFICKERS
Insight Crime has produced a new video report in 2 parts – part 1 focused on the factors that have led to the birth of a fourth generation of Colombian drug traffickers; and part 2 focuses on who they are, how they work and what they mean for the global international cocaine trade and those trying to stop it. Part 2 also explains why Australia and the Far East and better, safer and more profitable markets than the US, and why it will be so difficult to catch them.
ISRAELI REAL ESTATE CONGLOMERATE TO PAY SEC PENALTIES OF $500,000
On 16th March, Buckley Sandler reported that from 2007 into 2012, Elbit Imaging Ltd and its Netherlands-based subsidiary, Plaza Centers NV, paid millions of dollars to third party consultants and agents for purported services related to a Romanian real estate project and the sale of a real estate asset portfolio in the US. The SEC found that these payments were made with no indication that any services were actually provided.
MEDICAL MARIJUANA BUSINESS BANKING REMAINS DIFFICULT, LAWYERS SAY
The New Jersey Law Journal on 16th March carried an article saying that the banking industry is a major hurdle for the medical marijuana business in New York and other states. Big banks are reluctant to get involved because of the uncertainty around federal AML and other statutes aimed at discouraging moving illegal cash around. It reveals that, as a result of the limitations, only roughly 400 banks and credit unions nationally serve legal marijuana companies, according to Sacks and other official estimates. That’s just a fraction of the approximately 5,000 commercial FDIC banks. Despite the restrictions, the legal marijuana industry has flourished in states such as Colorado, which received $247 million in tax and fee revenue from legal marijuana last year, according to its revenue department.
VIRTUAL CASH HELPS CYBER-THIEVES LAUNDER MONEY, BECOMING KEY WAY TO LAUNDER CASH
On 16th March, the BBC carried an article saying that crypto-currencies and digital cash systems have become a key way for cyber-thieves to launder stolen funds, suggests research. Alongside its use in ransomware, virtual cash was also helping clean up other sources of stolen cash, said criminologist Dr Mike Maguire. Between $80 billion and $200 billion of cash generated by cyber-crime is laundered every year, said Dr McGuire drawing on a study by US analysts, RAND released in early 2018.
ESTIMATING THE GLOBAL COST OF CYBER RISK – THE RAND REPORT IS AVAILABLE AT –
THIRD COUNTRIES ALIGN THEMSELVES WITH EU SANCTIONS ON ZIMBABWE
On 16th March, an EU news releases advised that several third countries had declared their alignment with the remaining EU sanctions on Zimbabwe – measures which continue to affect 7 persons and 1 entity. The countries maintaining alignment are the former Yugoslav Republic of Macedonia, Montenegro, Albania, Bosnia & Herzegovina, EFTA countries Iceland, Liechtenstein and Norway, members of the EEA, Moldova and Armenia.
SPACE INDUSTRY ACT 2018 EXTENDS UK CRIMINAL LAW TO SPACECRAFT!
Having only recently ensured that British police could exercise their powers on ships in British waters, the UK has been quick to ensure that any criminal acts committed on a spacecraft launched from the UK would, if an offence in the UK, will also be an offence if carried out on the spacecraft. So that’s alright then… See section 51 of the Act.
BANK MELLI REVIVING TIES WITH FRENCH BANK
Financial Tribune in Iran in its 17th March edition reported that executives with Bank Melli Iran and France’s Banque Delubac met in Tehran to discuss a potential restoration of relations that were cut off after Iran was slapped with financial sanctions.
SOUTH AFRICA CHARGES FORMER PRESIDENT ZUMA
On 16th March, the Wall Street Journal and others reported charges announced by chief prosecutor against the former president concern a $2.5 billion arms deal made in the 1990s. He faces 16 charges, including racketeering, fraud and money laundering.
US COURT AFFIRMS 20-YEAR SENTENCE FOR PONZI SCHEME
Fox News on 16th March reported that a US federal appeals court has affirmed an Ohio ex-fugitive’s 20-year prison sentence for a Ponzi scheme that victimized hundreds of investors in the 1990s. Eric Bartoli and his co-conspirators swindled US and Latin America investors by selling them $65 million in unregistered securities. He fled the country, but was arrested by Peruvian police in 2013, and pleaded guilty to conspiracy and fraud charges in the US in 2016.
GUATEMALA ARRESTS OWNER, EXECUTIVES OF PALM OIL FIRM FOR BRIBERY AND FRAUD
Reuters on 16th March reported that the owner and 2 executives of the largest Guatemalan palm oil producer were arrested on charges of bribery and tax fraud, authorities said. Police arrested Hugo Alberto Molina Botran, owner of Reforestadora de Palmas del Petén (Repsa), and the 2 executives at Guatemala City’s international airport as they returned to the country.
9 CHARGED WITH STEALING MILLIONS IN SCAM INVOLVING CREMATION URNS IN TAIWAN
Taipei Times in its 17th March edition reported that the owners and staff of 2 companies that sold columbarium niches on fraud charges, saying they might have cheated victims out of US$2.4 million. Columbaria, repositories for urns containing cremated remains, are often housed in pagoda-like towers, and enable families to conduct ancestral worship rites and memorial services for the dead in line with Taiwanese traditions. Lin, Chiu and seven of their employees were accused of falsely claiming that they were selling columbarium niches and swindling some customers out of their life savings.
FRENCH FRAUD BODY UNVEILS HUGE COTES-DU-RHONE WINE SCAM
CTV News in Canada on 16th March reported that France’s anti-fraud body DGCRF says it has uncovered a huge scam in which a merchant tried to sell more than 48 million litres of wine falsely labelled as Cotes-du-Rhone. The merchant, whose identity wasn’t released, was handed preliminary charges of fraud and deception. He was freed on a €1 million bail and banned from working at his company.
TEXAN METALS COMPANY AML WEAKNESSES $15 MILLION PENALTY
Law 360 on 16th March reported Texas metals firm Elemetal LLC has pled guilty to having an inadequate AML programme and has agreed to pay $15 million and to stop buying precious metals overseas. It admitted to accepting gold without adequately vetting the people and companies that supplied it between August 2012 and November 2016, even when public information indicated that the gold was “criminally derived”.
HOW NORTH KOREA DODGES SANCTIONS
On 16th March, the New York Times published an article following the recent UN Panel of Experts report detailing how sanctions on North Korea led to it becoming adept in avoiding them. It highlights some of the sanctions violations mentioned in the report – such as between January and June 2017, India exported $514,823 in diamonds to North Korea, along with other precious metals and stones. Other luxury goods that have made it to North Korea: sparkling wine and spirits from Germany, wine and vermouth from Italy, and perfume and cosmetics from Bulgaria. A Singapore-based company has been stocking department stores in Pyongyang, the capital, with luxury items from Japan and Europe.
CHALLENGE INSPECTIONS UNDER THE CHEMICAL WEAPONS CONVENTION: BETWEEN IDEAL AND REALITY
A paper from The Nonproliferation Review dated 12th October is about the challenge-inspection system under the 1997 Chemical Weapons Convention has been regarded as an “epoch-making” procedure. Any state party can request a challenge inspection “anytime, anywhere, without right of refusal.” Yet, despite its high value in theory, no challenge inspection has ever been requested.
AEROSPACE AND DEFENCE 3D PRINTING MARKET TO SURPASS $4 BILLION BY 2023, REPORT SAYS
Defense News on 13th March reported that the aerospace and defence 3D printing market will grow at a compound annual growth rate of 23.2% over the next 5 years, reaching $4.76 billion by 2023, according to a MarketsandMarkets report. It attributes this growth to the significant reductions in maintenance and production costs of 3D printed components, as well as high reliability and performance levels.
GERMANY’S DECISION TO LEGALISE MEDICAL CANNABIS
Dentons on 16th March carried an article saying that, in March 2017, the German parliament voted for the legalisation of cannabis for medicinal purposes. This meant that many changes had to be made within its legislation. A year on, much has changed in this respect. Moreover, other EU member states have been closely monitoring Germany’s progress in the legalisation of medical cannabis and are now following suit.
RUSSIA TO ADD MORE AMERICANS TO ‘BLACK LIST’ IN RESPONSE TO SANCTIONS
Cipher News on 16th March reported Russia’s government will add more Americans to its “black list” in response to new sanctions against Russians accused of election meddling.