In his final Power Vertical podcast for Rferl on 30th March, Brian Whitmore (with Mark Galeotti) looks back over 7 years of covering Russia and what has happened, what was got right and what was got wrong, covering things like the Pussy Riot case, the rise of Aleksei Navalny, the Russian annexation of Crimea and intervention in the Donbas, and Vladimir Putin’s hybrid war on the West. Always interesting, this perhaps even more so in light of recent developments, putting matters more in perspective and context. Apparently, the podcast will continue in some form.
30th March 2018
ILLEGAL FISHING A ‘WIDESPREAD,’ ‘ORGANISED SECURITY THREAT’; MORE CHALLENGES
On 23rd February, Homeland Security Today reported that, according to retired Royal Navy Commander. Peter Horn of the Pew Charitable Trusts, writing for the Maritime Foundation, said that illegal fishing is a threat to international security as well as to the environment, notes an expert on surveillance technology, and high-tech tracking of illicit trawlers along with choking off supply chains is essential to reining in the threat. It is said that p to $23.5 billion a year is potentially lost in the global market due to IUU fishing, robbing law-abiding fishers of their economic security and livelihoods. Interpol launched Project Scale in 2013 with the support of 190 countries to established an international alert system for suspects associated with fisheries crimes. Separately, technology such as the Oversea Ocean Monitor facilitates integration of satellite tracking data and imagery data “with details about a vessel’s history, licences, ownership, risk index and more”. It is also said that IUU fishing supports, both directly and indirectly, non-state actors engaged in organised crime, piracy, and armed insurgency and terrorism, has become a part of the portfolio of illegal criminal organisations, and includes forced-labour crews kept out at sea for months in modern-day slavery.
CHINA SMUGGLERS BUSTED FOR DRONES USED TO TRANSPORT SMARTPHONES FROM HONG KONG
The Asahi Shimbun on 30th March reported that customs officers in southern China’s technology hub Shenzhen have busted a group of criminals using drones to smuggle $79.8 million worth of smartphones from Hong Kong to Shenzhen, the official Legal Daily reported in China. The authorities arrested 26 suspects who used drones to fly 2 x 200-meter cables between Hong Kong and the mainland to transport refurbished iPhones. It is said to be the first case found in China that drones were being used in cross-border smuggling crimes.
GREEK SHIPOWNER DILETON SAYS ARMS SMUGGLING ACCUSATIONS BY SAUDI ARE TRUMPED UP
Tradewinds reported on 30th March that Saudi officials are using arms smuggling charges to justify illegal interference with innocent merchant shipping to Yemen, claims Greek shipowner Dileton. In September 2017, nearly 5 months after the Saudi Navy seized the 47,600-dwt product tanker Androussa, a Saudi customs tribunal issued a finding that the ship had been engaged in the smuggling of weapons into war-torn Yemen.
2 SPANIARDS ARRESTED OVER SMUGGLING OF ARTEFACTS LOOTED BY ISIS
On 29th March, WTVA News reported that Spanish police have arrested 2 men for allegedly smuggling pieces of art looted by groups affiliated with ISIS from sites in Libya. Authorities there believe this to be the first ever police operation against the financing of terrorism through the looting of art. The suspects, both 31-year-old Spanish nationals, are art experts who bought the pieces — known in the market as “blood antiquities” — to sell in their gallery, according to a police statement.
UAE MONEY EXCHANGES TOLD TO RAISE THEIR STANDARDS
Gulf News Banking on 30th march reported that money exchange houses in the UAE have been ordered by the central bank to raise their standards, after several banks cut ties with them due to concerns about the risk of illicit financial flows. Its huge expatriate workforce and growing business and tourism sectors have made it a global centre for exchanging foreign currencies and transferring money to and from the Middle East, Asia, Africa and parts of Europe. The central bank has published a document laying out standards that exchange houses must comply with by January 2019 or risk fines or losing their licence.
COULD CLIENT-ATTORNEY PRIVILEGE PROTECTION COME TO JAPAN?
In Japan, Nagashima Ohno & Tsunematsu on 26th March published a briefing saying that the absence of attorney-client privilege protections in Japan means that regulatory investigations must be handled with particular care and consideration. Japanese regulators, such as the Japan Fair Trade Commission (JFTC) and the Japan Financial Services Agency, are empowered to compel the production of or seize materials that would otherwise be protected as privileged. Despite lobbying, as recently as April 2017 a JFTC Anti-monopoly Study Group report concluded that there was no requirement for such protection. However, in January the JFTC held a press conference to state that it will postpone all amendments to an Act to allow more time to consider fully the controversial issue of whether privilege-style protections should be introduced, and the JFTC will presumably continue assessing the feasibility of introducing privilege-style protections under the act, but the timing of such amendments is uncertain.
EU CUSTOMS VALUATION RULINGS — STAKEHOLDER CONSULTATION
On 29th March, Sidley Austin LLP published a briefing saying that, on March 1st, the European Commission opened a public consultation on the possibility of introducing binding rulings for customs valuation purposes – the so-called Binding Value Information (BVI). Currently, EU law allows a company to obtain a decision from the customs authority of an EU Member State on the classification and/or origin of goods. These decisions, called Binding Tariff Information (BTI) and Binding Origin Information (BOI), respectively, are legally binding throughout the EU, but such a system does not exist at EU level for customs valuation purposes.
RUSSIAN CORRUPTION FUNDS MAY HAVE GONE THROUGH IRISH BANKS
On 30th March, the Irish Times reported that money from one of the most high-profile Russian corruption cases in the past decade may have passed through bank accounts with AIB and Bank of Ireland. Approximately €2.44 million from an elaborate $230 million tax refund fraud carried out by a Russian gang in co-operation with corrupt Russian tax officials is alleged to have passed through the Irish accounts. A criminal investigation in Lithuania has led to the bank account of an offshore company linked to the Russian gang and the transactions on the account include multimillion dollar dealings with 2 Irish-resident companies.
TEAM OF FAKE INDIAN JOURNALISTS BROUGHT TO AUSTRALIA BY ‘PEOPLE SMUGGLER’
The South China Morning Post on 29th March reported that an Indian man has been charged with people smuggling after arriving at Australia’s Brisbane airport with 8 other travellers as part of a fake media contingent to cover the Commonwealth Games.
AUSTRALIAN BUSINESSMAN SENTENCED TO 10 YEARS FOR LARGEST TAX FRAUD IN AUSTRALIAN HISTORY
Baker McKenzie reported on 29th March that Michael Issakidis was sentenced to 10 years in prison over a $135 million tax evasion scheme. He and co-defendant, Anthony Dickson, reported false losses for their company Neumedix Health Australasia Pty Ltd. and used a web of offshore shell companies to evade corporate taxes. It is the largest tax evasion case in Australian history.
INDONESIAN GOVERNOR SENTENCED TO 12 YEARS FOR BRIBERY
On 29th March, Baker McKenzie reported that south-east Sulawesi governor, Nur Alam, was sentenced to 12 years in prison on bribery charges, for granting mining licences to a mining firm in which he has a financial stake. The mining resulted in environmental damage the area.
PODCAST: PROLIFERATION NEWS REVIEW FOR MARCH
On 30th March, the latest podcast from Arms Control Wonk Andrea discusses the new UN Panel of Experts report on North Korea’s illicit arms dealing, whether the DPRK is helping reconstitute the Syrian chemical weapons program, and some long-awaited discussions on Myanmar’s acquisition of North Korean ballistic missile systems.
HUNGARY’S “GOLDEN VISA” SCHEME
On 29th March, Transparency International published an article referring to a series of investigations by the Organized Crime and Corruption Reporting Project (OCCRP) into EU member states’ Golden Visa programmes, showing show how governments have been trading citizenship or residence rights for investment and the risks such schemes may pose. The Hungarian Investment Immigration Program is a controversial programme that is currently no longer accepting applications, there have been talks that the government may resume the programme after the 2018 parliamentary election. It allows non-EU citizens to acquire Hungary’s permanent residency status by investing at least €300,000 in special Hungarian government bonds. Different to other Golden Visa schemes, individuals investing in the Hungarian programme are fully repaid after 5 years with a fixed interest rate of 2%. Another unique feature is that foreigners do not directly invest in the residency government bonds, instead the investment is made through designated intermediary companies with opaque ownership structures.
ANTONOV: THE UNSUNG VICTIM OF THE RUSSIA-UKRAINE CONFLICT
On 30th March, the Carnegie Moscow Center published an article about the Antonov aircraft manufacturing company, a former Soviet and now Ukrainian company, and maker of the world’s largest aeroplane (the An 225) and the An 124 used for very heavy lift cargo movements (and by the Russian Air Force). The article provides a potted history of Antonov, which was established in Novosibirsk in 1946 as Research and Design Bureau No. 153, where it produced the classic An-2 biplane light transport (used for crop-dusting, and even now seen for use by parachuters). It moved to Kiev in 1952 and went on to produce dozens more iconic Soviet planes, from the regional An-24 jet that carried 30% of all Soviet air passengers to the large cargo planes that it focused on from the 1960s. following the collapse of the Soviet Union, Antonov fared far better than Moscow-based construction bureaus such as Tupolev, Ilyushin, and Yakovlev. In 2015, Antonov became part of the state-run Ukraine Defense Industry Corporation, but it has been 3 years since Antonov produced a serial aeroplane. It has no solid contracts, not even from the Ukrainian government. Whilst Russian co-operation in the aerospace industry continues despite sanctions – Russia continues to provide titanium parts and engineering solutions to global aircraft markets – this is a different story where Ukraine is concerned.
ARIZONA BITCOIN TRADER CONVICTED FOR CRYPTO MONEY LAUNDERING
Coindesk on 30th March reported that an Arizona bitcoin trader been convicted for using the cryptocurrency to launder the proceeds of drug deals. Thomas Mario Costanzo, who goes by Morpheus Titania on Twitter and operated a peer-to-peer bitcoin exchange website, was found guilty of charges of 5 money laundering by a federal jury in Phoenix on March 28th.
MALTA WATCHDOG PROPOSES NEW BLOCKCHAIN GAMING GUIDELINES
Coindesk on 30th March reported that the Malta Gaming Authority (MGA) has published proposed guidance on using distributed ledger technology and cryptocurrencies within the nation’s online gaming space. The consultation document is available at –
UKRAINIAN BUSINESSMEN LINKED TO RUSSIAN “FRONT MAN” FOR EQUATORIAL GUINEA’S RULING OBIANG FAMILY
OCCRP on 30th March reported that an alleged Russian “front man” for Equatorial Guinea’s ruling Obiang family counts 2 notable Ukrainian businessmen among his associates: Vladimir Yevdokimov and Roman Chelnokov – a former security official who was once imprisoned for smuggling missiles to Iran and an arms dealer with business interests throughout Ukraine’s civilian airports. The Russian, Vladimir Kokorev, 63, was arrested in Panama in 2015 along with his wife and son on allegations that they had played a key role in facilitating the looting of Equatorial Guinea by the family of the world’s longest-serving president. They were then reportedly extradited to Spain and are awaiting trial. The arrests followed an initial complaint alleging that Kokorev laundered $26.5 million of oil money embezzled from Equatorial Guinea into Spanish real estate and it is reported that Spanish investigators believe Kokorev has facilitated corrupt weapon sales. Yevdokimov had a colourful history and has been linked to various movements of weaponry and dual-use goods, including alleged air shipments from North Korea to Iran. The article provides background details on both Vladimir Yevdokimov and Roman Chelnokov.
MARITIME THREAT ‘ONE OF THE MOST DYNAMIC ASPECTS’ OF GLOBAL KIDNAPPINGS IN 2017
Homeland Security Today on 24th March reported that a review by Control Risks of global kidnapping trends in 2017 found that seizures at sea were one of the “most dynamic aspects of the crime,” with danger spots for ships continuing to shift. For example, the Philippines-based Abu Sayyaf Group offshore kidnap threat – a significant development in the 2016 kidnapping environment – all but disappeared from the Sulu Sea while the group focused its operations and resources elsewhere. However, the Gulf of Guinea remained the global hotspot for offshore kidnapping, but there were fluctuations in the pattern of the threat in the region.
MAYOR OF SENEGAL’S CAPITAL JAILED FOR FRAUD
The Anadolu Agency on 30th March reported that Khalifa Sall has been convicted of embezzling $3.4 million funds meant for development of Dakar.
HOME OFFICE STATEMENT ON PRE-CHARGE BAIL
The Home Office blog on 30th March responded to a BBC story on police releasing people arrested for violent crimes without bail since the 28-day limit on pre-charge bail was introduced, saying that victims of violence were potentially being placed at risk. The statement says that the Minister for Policing and the Fire Service wrote to Chief Constables in December, asking them to review their forces’ use of bail in order to ensure that those who objectively should be on bail are not being released without conditions.
GUYANA ASKS ICJ TO CONFIRM ITS BORDER WITH VENEZUELA
Law 360 on 30th March reported that Guyana asked the International Court of Justice to confirm a 119-year-old arbitral award setting the location of the country’s western boundary with Venezuela, following decades of unsuccessful negotiations and attempts to settle a controversy that has revived in recent years following the offshore discovery of oil.
KPMG HIT BY HONG KONG HIGH COURT DECISION IN $400 MILLION FRAUD CASE
KYC 360 reported on 30th March that KPMG has suffered a major setback in its battle against liquidators of former US-listed healthcare firm China Medical Technologies Inc, whose executives have been charged in the US with defrauding investors out of over $400 million. Hong Kong’s High Court rejected a KPMG procedural request that would limit the time in which China Medical liquidators can pursue claims against KPMG for losses and damages for its audits of the now-defunct company. A substantive hearing on that action is widely expected later this year.
SEC CHARGES 2 WITH SELLING ELDERLY INVESTORS DEFUNCT PRE-REVOLUTIONARY CHINESE BONDS
On 30th March, the SEC announced that it had charged the pastor of one of the largest Protestant churches in the US and a self-described financial planner in a scheme to defraud elderly investors by selling them interests in defunct, pre-Revolutionary Chinese bonds.
If you want to read the reasons given for the UN listing individuals and entities related to ISIL (Da’esh), Al-Qaida and associated individuals and entities sanctions go to –
On 29th March, the relevant UN Security Council Sanctions Committee added 1 entry to its sanctions list – KHATIBA IMAM AL-BUKHARI (KIB), for being associated with ISIL or Al-Qaida for “participating in the financing, planning, facilitating, preparing, or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf of, or in support of”, “recruiting for”, “otherwise supporting acts or activities of ” and “other acts or activities indicating association with” Al-Nusrah Front for the People of the Levant. Information on KIB and the reasons for its listing can be found at –
On 30th March, Shearman & Sterling published an article saying that FATF has published its report to G20 Finance Ministers and Central Bank Governors. In the report, FATF reiterates its commitment to tackle all sources, techniques and channels used in terrorist financing and to continue its work to increase financial transparency and improve the environment for remittances. The report provides an update on workstreams –
- strengthening the FATF’s institutional basis, governance and capacity;
- countering the financing of terrorism and proliferation;
- improving transparency and the availability of beneficial ownership information;
- supporting financial inclusion and access to regulated financial services;
- bank de-risking and the impact on remittances;
- FATF engagement with judges and prosecutors to improve the effectiveness of the criminal justice system; and
- the risks and opportunities of FinTech, RegTech and virtual currencies
A further update will be provided in November/December 2018.
The report is available at –
The Caracas Chronicles on 30th March reported that Panama has adopted the lists published by other countries about Venezuelan citizens (natural, judicial or final beneficiaries) politically exposed (PEP) to money laundering and the financing of terrorism, in order to prevent these crimes. The Panamanian National Committee against Money Laundering, Financing of Terrorism and the Proliferation of Weapons of Mass Destruction issued 2 resolutions, one about the prevention of acts of terrorism by the UN Security Council, and another urging the countries to adopt policies and procedures to limit PEP operations and transactions. In the case of Venezuela, about 55 natural persons and 16 companies have been listed. Panama is the first Latin American country to adopt measures against Venezuelan government officials. The article lists some of the names included.
The document containing the list can be seen at –
On 29th March, Homeland Security Today in the US reported that port control units trained under a US-backed initiative to boost interdiction of illegal good in shipping containers intercepted 45.5 tons of cocaine in Latin America and the Caribbean last year, the UN said in a recently released annual summary report. The UNODC Container Control Programme (CCP) offers training “to build capacity in countries seeking to improve risk management, supply chain security and trade facilitation in sea, land and airports in order to prevent the cross-border movement of illicit goods”. Referring to UN SCR 1540 which “establishes legally binding obligations to develop and enforce appropriate legal and regulatory measures against the proliferation of chemical, biological, radiological, and nuclear weapons and their means of delivery”, the article says that the programme focuses on the control of imports, exports and transit of commodities subject to licensing or authorisation, namely strategic trade controls on WMD, dual-use goods, and CBRNE materials. The UN report noted that air cargo is “at high risk of exploitation by organized criminal groups and terrorist organisations that exploit weak, ineffective and inconsistent border controls at airports”. In September 2017, the CCP also launched its “Chemical check-I” operation with Afghanistan, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan and Uzbekistan to prevent trafficking of chemicals and associated substances through international supply chains.
The UN report itself is at –