On 6th April, HM Treasury issued a Notice confirming the addition of KIB to ISIL (Da’esh) & Al-Qaida sanctions lists.
6th April 2018
AFRICA AND ARMS CONTROL: CHALLENGES AND SUCCESSES
On 3rd April, NGO Relief Web produced a report saying that although many African countries have adopted regional and global policies on arms control, the continued illicit proliferation of small arms and light weapons is an indication of wider transnational organised crime on the continent that calls for more attention. Criminal networks exploit gaps in the regulatory systems, porous borders and weak law enforcement procedures. It claims that many African borders are porous, making it fairly easy for illicit traffickers to move arms, and says that the illicit arms market involves various actors, from the manufacturer to the end user, and usually a number of illicit brokers along the supply chain. It reports on the sources of illicit arms flows in Africa – battlefield “losses”; diversion from legitimate (government) stockpiles; and the complicity of international sources and internal actors. It identifies as factors the falsification of end-user certificates; exploitation of the “grey” market (disguising the real owner by use of fraudulent documents; disguising the military nature of the goods through fraudulent documents; falsifying declarations of the supply company to conceal its true identity; and disguising arms as ‘humanitarian aid’); porous borders; and transhipment (with no internationally agreed upon standards that govern the transiting and transshipment of arms and ammunition).
MORE THAN 65,000 MIGRANT SMUGGLERS IN EU, SAYS EUROPOL
Prensa Latina on 6th April reported that the head of Europol’s European Migrant Smuggling Center, told the media that this was the number of people accused of these crimes included in their database at the end of 2017. In September 2015, Europol reported some 30,000 alleged traffickers of people, a figure that rose to almost 55,000 in late 2016 and 65,000 in 2017.
INDIA’S CENTRAL BANK BANS FINANCIAL ENTITIES FROM DEALING WITH CRYPTOCURRENCIES
Block Tribune on 5th April reported that the Reserve Bank of India (RBI), the country’s central bank, has barred banks and financial institutions from providing services to any individual or business dealing in cryptocurrencies. It has given regulated entities 3 months to unwind their business relationships with crypto-related companies. In a news conference it was said that said that while the regulatory response to cryptocurrencies are not uniform internationally, it is universally felt that they can seriously undermine the AML and FATF framework.
VENEZUELA HALTS COMMERCIAL TIES WITH PANAMA, SUSPENDS COPA FLIGHTS, IN TIT-FOR-TAT RESPONSE
Swissinfo on 6th April reported that Venezuela said it was halting commercial relations with Panamanian officials and companies, including regional airline Copa, for alleged involvement in money laundering, prompting both countries to recall their ambassadors. The resolution names Panamanian President Juan Carlos Varela and nearly 2 dozen Cabinet ministers and top-ranking officials and says that Panama’s financial system had been used by Venezuelan nationals involved in acts of corruption. The statement came a week after Panama declared Venezuelan President Nicolas Maduro and some 50 Venezuelan nationals as “high-risk” for laundering money and financing terrorism. Venezuela’s civil aviation authority said in a statement that inbound and outbound Copa flights were suspended for 90 days, despite it being a crucial provider of international flights following a sharp reduction in airline services to crisis-stricken Venezuela. Meanwhile, Reuters reported that the government of Panama said that it would remove its ambassador from Venezuela and asked the crisis-stricken OPEC country to withdraw its ambassador from Panama as well, reflecting the escalating tensions between the countries.
LATVIA’S RIETUMU BANKA PUTS ASIDE €20 MILLION PROVISIONS AFTER MONEY-LAUNDERING CASE IN FRANCE
The Baltic Course on 5th April reported that Latvia’s Rietumu Banka has put aside provisions worth €20 million after it was hit with a heavy fine over a money laundering scheme in France, the bank said in its unaudited 2017 report. Rietumu Banka was charged in France with involvement in aggravated tax fraud and money laundering. In 2017, a Paris court imposed a €80 million fine on the Latvian bank and also ordered more than 20 defendants in the case to pay €10 million in a shared fine as part of a civil lawsuit. Rietumu Banka lodged an appeal against that ruling, but the date for hearing that appeal has yet to be announced.
OVERVIEW OF EU SANCTIONS AGAINST RUSSIA, THE POSSIBILITY HONG KONG BUSINESSES MAKING INVESTMENTS THERE
On 6th April, HK TDC published an article saying that it may be important for some Hong Kong traders to be reminded of EU-imposed sanctions against Russia, particularly should businesses with ties to the EU be considering investing in Russia. The article summarises the sanctions imposed.
SAUDI ARABIA EXPECTS NO OIL SUPPLY IMPACT FROM HOUTHI TANKER ATTACK
Defence Web on 5th April reported that an attack on a Saudi tanker by Yemen’s Houthis will not hit oil supplies, Saudi Arabia’s energy minister said. Houthis attacked the oil tanker off Yemen’s main port of Hodeidah.
FACTSHEET: A SNAPSHOT OF THE ALL THE ZUMA SCANDALS
On 6th April, Business Report provided a snapshot of the allegations against former South African President Zuma.
SOUTH KOREAN COURT SENTENCED DISGRACED EX-PRESIDENT PARK GEUN-HYE TO 24 YEARS FOR CORRUPTION
The Seattle Times on 5th April reported the sentencing of the former President.
IRISH REVENUE ‘ACTIVELY MONITORING’ NEW FACEBOOK SELLING FEATURE FOR POTENTIAL TAX EVASION AND COUNTERFEIT GOODS
Dublin Live reported on 6th April that low prices have fuelled suspicions that some of the items could be fake.
RWANDA: OVER 250 LAND TITLES, BANK ACCOUNTS SEIZED AS PROSECUTORS GO AFTER CORRUPT OFFICIALS
All Africa reported that Rwandan prosecutors have over the past 3 years seized up to 234 land titles and frozen 29 individual bank accounts as part of efforts to recover stolen taxpayers’ money. The seizures were conducted under the 2015 law governing public asset recovery. At the international level, assets acquired fraudulently are traced through mutual legal assistance requests, and joint investigations, with countries contacted by Rwanda in this effort, including Nigeria, Central African Republic (CAR), Canada, Uganda, Spain and Belgium.
RE-ANALYSIS OF THE ASSASSINATION OF KIM JONG-UN’S BROTHER
On 5th April, the Royal United Services Institute published an analysis, with an opportunity to look at North Korea’s capabilities in the use of nerve agents. One thing it says is, from an operational perspective, the use of VX was wholly unnecessary and carried exceptional risk; given the relatively lax travel and visa requirements between Malaysia and North Korea at the time, Pyongyang’s operatives had numerous conventional options to eliminate Kim Jong-nam, who was frequently on Malaysian soil. The assassination revealed a dramatic technical improvement in North Korea’s offensive chemical capabilities. Apart from the US and Russia, North Korea stockpiles the most CW agents in the world and is estimated to have 2,500 to 5,000 tonnes of CW agents, which serve as a formidable unconventional deterrent. The signal from Kim is clear: underestimate North Korea at your peril, and that Kim’s regime currently relies in part on maintaining a robust and operational chemical capability for credible deterrence and cash.
E-COMMERCE LOGISTICS OPERATORS TO BE HIT BY NEW HMRC RULES
Loadstar on 5th April reported that UK e-commerce logistics operators are to be hit by a wave of new regulations as tax authorities seek to claw back billions of unpaid import charges. Companies involved in distributing e-commerce goods will be subject to the new Fulfilment House Due Diligence Scheme, which HRMC is set to bring into law next year.
INSIDER TRADING: THE GALLEON HEDGE FUND SCANDAL
In the latest TRACE podcast, Anita Raghavan discusses Raj Rajaratnam and her book, “The Billionaire’s Apprentice, The Rise of the Indian-American Elite and Fall of the Galleon Hedge Fund”.
MAJOR GARDA OPERATION FOCUSED ON ORGANISED CRIME GANG IN DUBLIN
Dublin Live reported that a major Garda operation is underway across 5 counties in Ireland including Dublin. Officers are said to be targeting an organised crime gang based in Drogheda.
THE TRANSPORT AND SUPPLY CHAIN IN SAUDI ARABIA
On 4th April, Clyde & Co produced a briefing saying that Saudi reforms also means changes to the transport sector, with significant investments expected in seaports, road and rail networks to improve the efficiency of the transportation of goods within the Kingdom. The briefing deals with which issues the Saudi transportation sector is currently facing and how technology and other developments may impact it.
AUSTRALIA DROPS AML OBLIGATIONS FOR CASH-IN-TRANSIT AND DESIGNATED FIRMS
KYC 360 on 5th April reported that businesses providing cash-in-transit and insurance services, except car dealers, have been exempted from compliance and reporting obligations under Australia’s AML/CFT rules. They will also no longer be required to report transactions or suspicious matters, in accordance with the Financial Transaction Reports Act 1988, financial regulator AUSTRAC said.
US OPIOID CRISIS: FBI LEADS ENFORCEMENT ACTIONS TO DISRUPT ONLINE OPIOID SALES
Homeland Preparedness on 5th April reported that the FBI has led an enforcement action, called Operation Disarray, that led to hundreds of interactions and arrests of individuals involved in the online sale of opiates. The operation, the first of its kind to occur at the same time in all 50 states, was part of a broader DoJ initiative to disrupt the sale of opioids online. Hundreds of FBI agents and federal partners, including personnel from DEA, US Customs and Border Protection, Internal Revenue Service, Department of Homeland Security and US Postal Inspection Service participated in the operation by conducting searches, making arrests and carrying out “knock and talks” with individuals known to have bought or sold drugs through darknet marketplaces.
PODCAST: CHOKEPOINTS IN GLOBAL FOOD TRADE, AND HOW THE INTERNET IS CHANGING LANGUAGE
The latest Undercurrents podcast from Chatham House focusses on vulnerabilities in the global food trade, and a debate about how the internet is transforming the English language.
UKRAINE SEPARATIST MILITARY INDUSTRIAL COMPLEX
On 6th April, Medium carries an article reporting that separatist groups in eastern Ukraine are modifying weapons and producing additional firepower. Oplot is a pistol that is by far the most complex weapon to be produced from scratch by Russian-led separatists. The more well-known locally produced arms are rifles designated as counter-sniper rifles. While these arms are more powerful than the Oplot, they are also much less complex in their firing mechanisms. An example is the Donchanka single-shot 0.50 calibre rifle. The article says that, if nothing else, there is interesting innovation surrounding the small arms development in separatist-held Ukraine, and ambitious claims of a “military-industrial complex” in Donetsk are, by all indicators, overstated, but it is clear that there is some actual local production of new arms.
THE ISIS FILES
On 4th April, the New York Times carried an article saying that on 5 trips to battle-scarred Iraq, journalists for The New York Times scoured old Islamic State offices, gathering thousands of files abandoned by the militants as their ‘caliphate’ crumbled. The documents were pulled from the drawers of the desks behind which the militants once sat, from the shelves of their police stations, from the floors of their courts, from the lockers of their training camps and from the homes of their emirs. The New York Times worked with outside experts to verify their authenticity, and a team of journalists spent 15 months translating and analysing them page by page. The article provides an overview of the types of material found.
REVIEWING CANADA’S AML/CFT REGIME
On 4th April, Dentons produced an analysis of a consultation document that proposes a broad range of potentially significant changes and describes the most notable proposals. The Department of Finance released the consultation on 7th February. Responses are required by 30th April.
OFAC DESIGNATES MEXICAN MUSIC PROMOTER AND VENEZUELAN-ITALIAN FASHION PHOTOGRAPHER
On 6th April, OFAC designated Mexican music promoter Jesus Perez Alvear as a Specially Designated Narcotics Trafficker (SDNT) and Venezuelan-Italian fashion photographer Miguel Jose Leone Martinez, who helps lead an international prostitution ring associated with the Los Cuinis drug trafficking organisation.
TRANSPARENCY INTERNATIONAL HUNGARY HISTORY OF CORRUPTION IN HUNGARY BETWEEN 2010 AND 2018
On 29th March, Transparency International Hungary published its Black Book that deals with the history of corruption in Hungary between 2010 and 2018. The book gives a detailed analysis of Hungary’s anticorruption performance, major cases of domestic corruption, and the use of EU funds and corruption risks in public procurement. The English version of the Black Book also contains a description of 30 corruption cases, a figure that, it says, is still just the tip of the iceberg.
BAKER MCKENZIE EXPORT CONTROL WEBINAR, MARCH 2018
Some of the topics covered in the free webinar were the following.
China – draft Export Control Law (ECL)
- Includes – Consistent with international standards such as the Wassenaar Arrangement – Includes new concepts such as “re-export” and “deemed export” – Concerns re-export restrictions might impact use of Chinese inputs Key aspects – Establish a science-based export control listing system – To develop a rigorous export control management system that includes licensing, permitting and reporting – Enhance enforcement powers and streamlining compliance procedures.
- Blacklists – Can blacklist foreign importers and end-users that breach the ECL – Can prohibit the export of controlled items to such persons
- Retaliatory measures – China may adopt retaliatory measures if subject to discriminatory export control measures by any country National security – May implement controls to safeguard security and interests during wartime or urgent situations concerning international relations
EU Dual-Use Regulation – recast version may come into force later this year, proposals include –
- Modernised to take account of new technology risks (Cloud, cyber)
- Evolving foreign policy on WMD and access to nuclear weapons
- Insufficient harmonisation at present of licensing etc between Member States
- Extension for controls linked to human rights abuses
- Make changes more quickly in future
- Proposal for cyber-surveillance technologies as “a new category of dual use items” and with end-use controls on non-listed items, so “catch-all” controls on non-listed cyber-surveillance items in specific circumstances
- Specific prohibition on circumvention of export controls
- Control on cyber technologies used in warfare
- New EU general licences: EU007: Low Value Shipments (< €5,000); EU008: Intra-company transfer of software and technology; EU009: Encryption items
- Clarification of intangible technology transfer (ITT) controls and facilitation of low-risk technology transfers, as they only become subject to control when the dual-use technology is made available to a person in a third country, which is in particular expected to facilitate the use of cloud services
- Longer duration for individual licences granted by Member States and for EU Global Export Authorisation registrations – 2 years to reduce administration and give more time to focus on higher risk areas
- Licences will not be granted for cyber security items where likely to lead to serious violations of human rights
US Sudan export control: US sanctions and export controls remaining for Sudan include –
- SDN designations such as those related to Darfur and South Sudan remain in force
- Sudan remains a State Sponsor of Terrorism
- US arms embargo implemented on February 14th
- State-level divestment efforts targeting companies in Sudan
- 15 parties involved in South Sudan’s energy sector added to “Entity List” on March 22nd, so subject to export and other restrictions
OECD: LOWER RATING FOR BELGIUM ON INTERNATIONAL STANDARDS ON TRANSPARENCY AND THE EXCHANGE OF INFORMATION ON REQUEST
The Brussels Times on 6th April reported that Belgium’s rating in the latest peer review report by the OECD Global Forum on Transparency in respect of the international standards on transparency and the exchange of information on request has been reduced to only “largely compliant”. The previous review in 2014 had assessed it as “compliant”. The 2017 report, published on the 4th April, attributes this regression mainly to an unfinished adaptation into law of international standards and calls for progress on the relevant legislation in Belgium to be monitored. The review does report that Belgium is “largely open” to information exchange and provides prompt responses and qualitative information to its numerous partners.
KOSOVO INDICTS 11 FOR GIVING OUT STATE JOBS TO POLITICAL LOYALISTS
Reuters on 6th April reported that 11 people, including a minister and lawmaker from the ruling party, have been indicted for allegedly handing out state jobs to people based on their political affiliation. Almost all of the indictees are members of the ruling Democratic Party of Kosovo (PDK), including Besim Beqaj, the minister for innovation and entrepreneurship.
ENI OFFICES IN ITALY SEARCHED IN CONGO REPUBLIC CORRUPTION PROBE
On 6th April, Reuters reported that the offices of Italian oil major Eni have been searched and documents seized in an investigation by Milan prosecutors into alleged corruption in the Republic of Congo 2009-2014. The state-controlled company is also under investigation in a separate case over alleged corruption in Nigeria. Eni is the largest foreign oil and gas producer in Africa and has operated in the Congo Republic since 1968.
BORDEAUX WINE FRAUD: WINE MERCHANT ORDERED TO PAY €200,000
Decanter magazine on 6th April reported that Merchant Grands Vins de Gironde has been found guilty of wrongly labelling significant quantities of Bordeaux appellation wine and must pay a €200,000 fine, according to reports
INDIA ASKS HONG KONG TO ARREST JEWELLER NIRAV MODI IN BANK FRAUD
Reuters on 6th April reported that India has asked authorities in Hong Kong to arrest jeweller Nirav Modi, one of the main suspects in a $2 billion fraud at state-run Punjab National Bank suggesting that it believes the fugitive is in the Chinese territory.
UK NOTICE TO IMPORTERS 2901: ALUMINIUM PRODUCTS
On 6th April, the UK Department for International Trade issued a new Notice to Importers advising that the European Commission intends to expand its prior surveillance regime to cover aluminium products. It is expected that from early May 2018, imports of aluminium will require an import licence before they can be imported into the EU.
DRUG TRAFFICKER COLLECTED COCAINE ON CARIBBEAN CRUISE
On 6th April, the NCA reported that Kevin Enright, 55, from Dunstable, a convicted drug dealer who used a 3-week Caribbean cruise as a cover to bring cocaine worth more than £200,000 into the UK has been jailed for 9½ years, following an investigation by the National Crime Agency. He was intercepted by Border Force officers as he disembarked a cruise liner at Southampton Docks on 31st October. In total, there was almost 3 kg of cocaine in his luggage.
YEMENI REBELS TARGET SAUDI OIL INDUSTRY
Janes.com on 6th April reported that Yemeni rebels, Ansar Allah (Houthis), have announced 3 attacks on Aramco facilities in 10 days, and the Saudi-led coalition blamed them for an attack on an oil tanker in the Gulf.
ITALY ARRESTS TOP MAFIA BOSS
On 6th April, OCCRP reported that Italian police have arrested one of the most well-known ‘Ndrangheta bosses in an isolated hut in a village in southern Calabria. Giuseppe Pelle has been wanted since 2016 when he received a 2½ year prison sentence for attempted extortion and being associated to organised crime.
GLASS EEL SMUGGLERS EARNED MORE THAN €37 MILLION FROM ILLEGAL EXPORTS TO ASIA
On 6th April, Europol reported that it had supported Operation Elvers which was led by the Spanish Guardia Civil in collaboration with the Portuguese authorities. 10 members of an organised crime group involved in illegally exporting glass eels to Asia have been arrested. The ring was based in Spain, but also operated out of Portugal and Morocco. Police discovered how the criminals sent large amounts of glass eel from Madrid to Porto, Portugal and from Algeciras, southern Spain to Morocco. Consequently, they were able to block several deliveries at Portuguese airports and stop a van carrying 129 kg of eels heading to Morocco. In 2009 the European species Anguilla anguilla was listed in Appendix II of the Convention on International Trade in Endangered Species (CITES) of Wild Fauna and Flora. This meant that the eels could be sold, provided strict requirements were met and the corresponding permits were obtained. It soon became clear that these measures were insufficient; the EU therefore established a ‘zero quota’ to ban shipments to third countries.
MALAYSIA INTRODUCES “CORPORATE LIABILITY” BILL
On 6th April, Baker McKenzie reported that the Malaysian Government has proposed a Bill that will make corporations liable for the corrupt practices of its associated persons. An “associated person” includes directors and employees and could extend to third party service providers. The Bill imposes strict liability on commercial organisations, in that organisations can be liable regardless of whether they had actual knowledge of the corrupt actions of its associated persons. To avoid liability, organisations must be able to demonstrate that they had in place adequate procedures designed to prevent associated persons from undertaking corrupt practices.
SEC SECURES COURT ORDER AGAINST CRYPTOCURRENCY BUSINESS, LONGFIN
On 6th April, Mondo Visione reported that the SEC has obtained a court order freezing more than $27 million in trading proceeds from allegedly illegal distributions and sales of restricted shares of Longfin Corp. stock involving the company, its CEO, and 3 other affiliated individuals. The SEC alleges that Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi, and Suresh Tammineedi illegally sold large blocks of their restricted Longfin shares to the public while the stock price was highly elevated. Through their sales, Altahawi, Penumarthi, and Tammineedi collectively reaped more than $27 million in profits.
UK FCA REQUIREMENT FOR FIRMS OFFERING CRYPTOCURRENCY DERIVATIVES TO BE AUTHORISED
On 6th April, Mondo Visione carried an article saying that cryptocurrencies are not currently regulated by the FCA provided they are not part of other regulated products or services. Cryptocurrency derivatives are, however, capable of being financial instruments under the Markets in Financial Instruments Directive II (MIFID II). Firms conducting regulated activities in cryptocurrency derivatives must, therefore, comply with all applicable rules in the FCA’s Handbook and any relevant provisions in directly applicable EU regulation. These derivatives include –
- cryptocurrency futures– a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties;
- cryptocurrency contracts for differences (CFD)– a cash-settled derivative contract in which the parties to the contract seek to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD contract at its outset and at its termination; and
- cryptocurrency options– a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies
US, MEXICO AND COLOMBIA LAUNCH MAJOR MARITIME DRUG SMUGGLING CRACKDOWN
Homeland Security Today on 1st April reported that the US and Mexican governments may be sparring over immigration and trade, but the countries are joining forces on the high seas to go after drug smugglers. The US, Mexico and Colombia will target drug smugglers off South America’s Pacific coast in an operation expected to last for the foreseeable future.
On 6th April, FATF released its mutual evaluation report on Iceland’s measures to fight money laundering and the financing of terrorism and proliferation which concluded that Iceland needs better internal co-operation and co-ordination to effectively tackle money laundering and terrorist financing. It says that between 2008 and 2015, Iceland demonstrated a high level of co-operation and coordination as they focused almost exclusively on the financial crimes and complex cases surrounding the 2008 banking collapse. But, this did not extend to AML/CFT, which has not received sufficient attention as a result. It also says that Icelandic authorities have a fragmented understanding of AML/CFT risks. With the exception of the three large commercial banks in Iceland, the financial sector and non-financial businesses and professions have a poor understanding of the money laundering or terrorist financing risks to which they are exposed. These private sector entities have limited awareness of their AML/CFT obligations and report very few suspicious transactions in light of the risks present. FATF said that Iceland must use its ability to coordinate domestic authorities and put practices in place to strengthen its efforts to tackle money laundering and terrorist financing and says that Iceland indicated its willingness to do so.
On 6th April, OFAC advised that it had added 23 individuals to its Ukraine/Russia related sanctions, notably including Oleg Deripaska and Igor Arkadyevich Roteberg. It also designated an additional 14 entities under its Ukraine/Russia sanctions, including entities linked to Deripaska, the RFK Bank, United Company Rusal PLC and EN+ Group PLC from Jersey, and B-Finance Ltd from the BVI. The details for existing listing Rosboroneksport were also amended. OFAC also issued 2 General Licenses concerned with winding down existing and ongoing operations and authorising certain transactions necessary to divest or transfer debt, equity, or other holdings in certain blocked person.
8 new FAQ were issued concerned with the new listings, together with 1 updated FAQ concerned with CAATSA sanctions against Russia.
For more information on those listed see –
The Order Paper for the April sitting of the Island’s parliament includes the following –
- European Union (North Korea Sanctions) (Amendment) Order 2018 [SD 2018/0095], which applies in Island law EU Regulation 2018/285/EU of 26th February 2018 amending Regulation 2017/1509/EU re restrictive measures against the Democratic People’s Republic of Korea.
- European Union (Belarus Sanctions) (Amendment) Order 2018 [SD 2018/0101] and Belarus Sanctions (Amendment) Regulations 2018 [SD 2018/0102], which apply and give effect to EU regulation 2018/275/EU of 23rd February 2018 concerning Belarus.
- Export Control (Amendment) Order 2018 (Application) Order 2018 [SD No 2018/0080].
- Export Control (Venezuela Sanctions) Order 2018 (Application) Order 2018 [SD No 2018/0087].
- Export Control (North Korea Sanctions) Order 2018 (Application) Order 2018 [SD No 2018/0094].
- Terrorism and Other Crime (Financial Restrictions) Act 2014 (Amendment) Order 2018 [in draft], which will clarify the mandatory conditions that must be attached to a licence granted by the Treasury in the narrow circumstances of the UN sanctions on Iran.
- Terrorism and Other Crime (Financial Restrictions) Act 2014 (Section 63 Delegation) Order 2018 [SD 2018/0103], which delegates certain functions of the Treasury to the FIU in respect to the reporting etc of sanctions matters to the FIU (as the FIU accepts suspicious activity reports relating to sanctions) w.e.f. 1st
CHINA ANNOUNCES CRACKDOWN ON SEAFOOD (INCLUDING SALMON) SMUGGLING
Intafish AND Undercurrent News on 6th April reported that Chinese authorities claimed to have broken up a “massive” scheme to illegally import the fish via Vietnam which illegally imported Norwegian salmon worth up to $98.4 million. The raids also uncovered seafood products from Indonesia, Ecuador and West Africa, as well as beef, chicken and pork,
Undercurrent News had already reported on 1st February that –
BOOM IN ‘GREY TRADE’ DRIVES VIETNAM’S SEAFOOD IMPORTS FROM $25 MILLION TO OVER $5 BILLION
It described Haiphong as a hotbed of smuggling, also referred to as the “grey trade” or “grey channel”. Based on an Undercurrent News analysis of international trade data and information from industry sources, smuggling is the main reason behind Vietnam’s increase in seafood imports from $25 million in 2001 to over $5 billion in 2016; a rise unmatched in its compound annual growth rate – 40% – by any other country in the world. The grey trade is well-known; it refers mostly to seafood unloaded in Haiphong and sent onwards to the border with China, where it is taken across the border illicitly to avoid Chinese customs duties. It reported that smugglers also use the grey trade to bring goods into China they cannot sell elsewhere; in 2016, Chinese authorities seized contaminated seafood sourced from waters near Fukushima, which had been smuggled into China through Vietnam.
5th April 2018
ICE ARRESTS REGGAETON SINGER FOR BULK CASH SMUGGLING
In the US, the Immigration & Customs Enforcement agency reported on 4th April that Carlos Efrén Reyes-Rosado, aka Farruko, 27, a reggaeton singer had been arrested for failure to declare transportation of monetary instruments more than $10,000 and for bulk cash smuggling into the US. He had travelled by helicopter from the Dominican Republic to Puerto Rico where he was detained after a search of his bags revealed that he was carrying approximately $51,802 in U.S. currency in his luggage and in the soles of his shoes in his bags.
MANUAL PUBLISHED IN AFGHANISTAN TO HELP RECOGNISE HUMAN TRAFFICKING VICTIMS
InfoMigrants on 4th April reported that the Afghan High Commission to Combat Trafficking in Persons and Smuggling of Migrants (the TIP Commission) has launched a training manual in Kabul on how to identify and assist victims of human trafficking in Afghanistan. The manual is aimed at state workers in the country and NGO stakeholders. The manual is the first of its kind in Afghanistan, and is funded by USAID, the US agency for international development. The manual will also be distributed to shelter managers and community leaders such as members of shuras, imams and university lecturers, to raise awareness on human trafficking.
NIGERIA BEGINS PROFILING OF NGO TO COMBAT TERRORISM FINANCING
This Day on 5th April reported that, as part of measures aimed at tackling illicit flow of funds in the country, the Nigerian federal government said that it had begun the profiling of non-governmental organisations (NGO) in the country to determine their level of vulnerability as conduit for money laundering as well as terrorism financing.
THE MALTESE CONNECTION WITH IRAN SANCTIONS BUSTING
On 5th April, the Financial Times carried an article on the Pilatus Bank/Sadr affair, providing a comprehensive breakdown. A must-read to understand the situation and the allegations.
BRAZIL’S EX-PRESIDENT, ‘LULA,’ CAN BE JAILED, COURT RULES
The New York Times reported on 5th April that Brazil’s highest court that former President Luiz Inácio Lula da Silva can be sent to prison while he continues to appeal his corruption conviction — a decision that upends the nation’s politics and appears to quash his bid to return to power, when he is reportedly leading candidate in the October 2018 election. Last July, he was convicted of corruption and money laundering, and sentenced to almost 10 years in prison, and in January, an appeals court upheld the conviction and increased the sentence to 12 years.
INDIA: BANK OF BARODA SLAPPED WITH FINE OVER REMITTANCE SCAM
In India, the Economic Times reported on 4th April that the state-owned bank had been fined for “failing” to adhere to AML requirements, and not having an effective system to report suspicious transactions linked to a scam in its Delhi-based branch. The FIU has levied the maximum penalty for each instance of “delayed” filing of Suspicious Transaction Reports (STR) by the state-owned bank in the case. After about 3 years of investigation, the FIU has held that the bank failed on at least 5 counts in detecting wrongdoing and instances of money laundering at its branch where the forex remittance scam had been reported in 2015.
HAWKS INVESTIGATING “PROPHET” BUSHIRI FOR MONEY LAUNDERING
Zimeye on 4th April reported that South Africa’s crime investigation department, the Hawks, has confirmed investigating the wealthy “prophet” Shepherd Bushiri on allegations of money laundering for illegally sending out of the country millions of Rands to his native home in Malawi. Bushiri is said to be sending out the money to his home country using his private jet and does not put the cash into the country’s banking system but invests it directly into his numerous business ventures.
SAPIN 2: FRENCH ANTICORRUPTION AGENCY (AFA) HAS PUBLISHED GUIDELINES FOR ECONOMIC ACTORS SPECIFYING THE FRAMEWORK OF ADMINISTRATIVE CONTROL AND THE DOCUMENTS TO BE PROVIDED
Duff & Phelps on 3rd April published a briefing about of the details of the AFA’s framework of regulatory control published in February 2018. In June 2017, France’s anti-corruption legislation, The Law on Transparency: The Fight Against Corruption and Modernization of Economic Life, more commonly known as “Sapin II” came into operation. The law stipulates that companies must establish an anti-corruption program to identify and mitigate corruption risks. Now a questionnaire and the list of documents to be provided during an inspection complement the previously issued recommendations regarding the implementation of an efficient anti-corruption programme internally and are part of a constructive effort to ensure the quality and effectiveness of the whole framework put in place to prevent and to detect corruption and bribery.
See also –
MAKING PARCEL DELIVERY MORE AFFORDABLE IN THE EU
On 30th March, NCTM Studio Legale produced an article saying that the EU is close to finalising new rules on making the cross-border parcel delivery market more transparent and subject to increased regulatory controls. The new rules are expected to come into effect at the beginning of 2019. The article explains the main elements of the relevant EU Regulation.
CANADA’S FIRST QUANTUM EXPECTED TO PAY $1 BILLION IN ZAMBIA TAX DISPUTE
The Globe & Mail in Canada on 27th March reported that Canadian copper producer First Quantum Minerals Ltd will ultimately pay around US$1 billion to settle its tax spat with Zambia, according to a Wall Street analyst. The Zambia Revenue Authority (ZRA) has slapped First Quantum with a US$7.9 billion tax bill, claiming the miner had drastically underpaid certain import duties over a period of 5 years. The article says that First Quantum not the only Canadian mining company to be blindsided by tax demands from developing countries attempting to obtain an increasing share of resource riches, as commodity prices rebound – remarking on moves in Tanzania and DRC.
COUNCIL OF EUROPE ADOPTS NEW RECOMMENDATION ON TERRORISTS ACTING ALONE
On 4th April, the Council of Europe in a Recommendation from the Committee of Ministers reviews measures for preventing radicalisation, better identifying individuals who could potentially act alone and stepping up co-operation in the criminal law field. European countries are urged to consolidate their legal arsenal, drawing on the Convention on the Prevention of terrorism and its additional Protocol on tackling the problem of foreign terrorist fighters, as well as preventive tools (awareness and prevention campaigns, help-lines, training for law enforcement agencies, education and social-services professionals, etc).
EU LAUNCHES PROJECT AGAINST COUNTERFEITING IN SE ASIA
On 5th April, EurActiv carried an article reporting that the EU has put forward a project to strengthen intellectual and industrial property rights in all ASEAN countries. It is said that the project will include 2 platforms, IP Key Southeast Asia (IP Key SEA) and ARISE Plus, which are both part of EU policies in the field of intellectual and industrial property. ASEAN includes Burma, Brunei, Cambodia, the Philippines, Indonesia, Laos, Malaysia, Singapore, Thailand and Vietnam.
VAT: EU PROPOSALS FOR REFORM AND THE IMPLICATIONS OF BREXIT
On 3rd April, the House of Commons EU Scrutiny Committee published a report on post-Brexit VAT matters, including administrative co-operation to tackle VAT fraud.
DANSKE BANK’S DIRECTOR RESIGNS AMID PROBE
Market Watch on 5th April reported that Danske Bank AS said that Lars Morch has resigned from his position as member of its executive board amid a probe into money laundering in Estonia. Morch has been with the Danish bank since 1999 and been responsible for business banking since 2012, including the company’s international banking units and Baltic operations.
SECOND JAPANESE SHIPPING FIRM ADMITS TO CARTEL CONDUCT IN AUSTRALIAN COURT
On 5th April, Reuters reported that Kawasaki KK (K-Line) has pleaded guilty to criminal cartel conduct in the transport of vehicles, the second Japanese shipping company to make such an admission. Nippon Yusen KK (NYK) was convicted last year by Australia’s Federal Court and fined A$25 million for its part in the activity. The conduct relates to the shipping of cars, trucks and buses to Australia between 2009 and 2012, according to the Australian Competition and Consumer Commission (ACCC).
JAPAN UNVEILS GUIDELINES FOR ALLOWING INITIAL COIN OFFERINGS (ICO)
On 5th April, Bloomberg reported that Japan is moving toward legalising ICO, even as countries such as China and the US restrict the fundraising technique because of their risks for investors. A government-backed study group laid out basic guidelines for further adoption of ICO, including rules for identifying investors, preventing money laundering, tracking progress of projects and protecting existing equity and debt holders.
SWISS BANK WHISTLEBLOWER ARRESTED IN SPAIN
On 5th April, Reuters reported that Spanish police have arrested a former employee of HSBC’s Swiss private bank who was convicted of industrial espionage after leaking clients’ tax information. Herve Falciani, a French citizen, fled Geneva to France in 2009 after HSBC discovered the leak and put him under investigation. He says he is a whistleblower who wanted to help governments track down tax evaders.
SLOVAKIAN POLICE ARE MANIPULATING CRIME STATISTICS, NGO CLAIMS
The Slovak Reporter on 5th April reported that the real state of Slovak police is much different from the image presented by the leaders of the Interior Ministry and the Police Corps, according to the findings of the Let’s Stop Corruption Foundation and the Trend weekly which interviewed 16 police investigators.
MANCHESTER CORPORATE FINANCIER’S TAX FRAUD CHARGES DROPPED
Insider Media on 5th April reported that the co-founder of a Manchester-based corporate finance house has had all charges of tax fraud against him officially dropped. Richard Hughes, who co-founded Zeus Capital, had been charged with conspiracy to defraud and intent to defraud HMRC by making claims for capital loss relief. 2 years ago Hughes and 9 others were accused of a major tax fraud involving a £134 million tax investment scheme. The charges came after an investigation which spanned more than 3 years. Despite being cleared Mr Hughes is still furious at the way his case has been handled by the authorities and is calling for any inquiry to be held in public.
PAIR JAILED FOR SUPPLYING 270 PUBS WITH ILLEGAL ACCESS TO PREMIER LEAGUE FOOTBALL IN £1.5 MILLION CON
On 5th April, Chronicle Live reported that conmen who ran a lucrative sports broadcasting fraud in scores of pubs across the North East have been jailed for a total of 9 years. John Dodds set up a sophisticated scam to provide illegal access to pay-TV, and his business partner, Jason Richards, also known as Jason Richard Graham, later joined in the worldwide fraud with “commander-in-chief” Dodds.
GROUND-BREAKING STUDY HIGHLIGHTS SCALE OF AFRICA-ASIA WILDLIFE TRADE
On 5th March, the Traffic NGO said that more than 1.3 million live animals and plants, 1.5 million skins and 2,000 tonnes of meat from CITES-listed species have been exported from 41 African countries to East and Southeast Asia since 2006, a ground-breaking new TRAFFIC report has revealed. In recent years, the focus on wildlife trade from Africa has centred on the illegal trade and the devastating onslaught on iconic species like elephants and rhinos. Comparatively little attention has been given to legal wildlife trade from the continent—until now.
UN REPORT REVEALS EXTENT OF NORTH KOREAN ARMS SALES
Janes.com on 5th April carried an article about the recent report by a UN panel of experts has identified a broad network of defence co-operation between North Korea and several other countries. It highlights the co-operation with Syria over chemical weapons – including the supply to front companies of resistant valves, thermometers, and acid-resistant tiles in quantities required for a “large-scale industrial project”. The tiles were assessed by an unidentified UN member state as capable of being used to construct the internal walls of a chemical facility. It also confirms the supply of ballistic missiles to Myanmar. The report also cited a UN member state as confirming that North Korea’s Ryonhap-2 Corporation assisted Syria in developing a manoeuvrable re-entry vehicle (MRV) for the latter’s ‘Scud D’ ballistic missile in 2008.
HOUTHI MILITANTS ATTACK SAUDI OIL TANKER IN RED SEA
On 4th April, Missile Threat reported that a missile was fired at Saudi-flagged supertanker, “Abqaiq” owned by Saudi shipping group Bahri, while in international waters west of Al Hudaydah port. The ship was able to complete its planned course while accompanied by a coalition warship.
IS CÔTE D’IVOIRE BECOMING A WILDLIFE TRAFFICKING HOTSPOT?
On 27th March, ENACT Africa posed this question saying that since 2016, Côte d’Ivoire has recorded at least 5 major incidents (seizures and/or arrests) related to wildlife trafficking. The most recent of these occurred in January, with the seizure of 578 kg of ivory, and over half a ton of pangolin scales, leopard skins and other items. It says that the seizures indicate that wildlife trafficking is a major phenomenon in the country.
CHINA’S MARITIME SILK ROAD: STRATEGIC AND ECONOMIC IMPLICATIONS FOR THE INDO-PACIFIC REGION
On 2nd April, the Center for Strategic and International Studies (CSIS) produced a detailed examination of the effects of the China project on the Indo-Pacific region. It says that there is a shortage of infrastructure investment to meet the needs of developing nations across the Indo-Asia-Pacific region and most nations have welcomed the opportunity to bid for Chinese funding. However, at the same time, there are growing questions about the economic viability and the geopolitical intentions behind China’s proposals. Large-scale investments are also structured in ways that invite questions about the potential for China to exert undo leverage over the domestic and foreign policies of heavily indebted recipient countries. To shed light on some of these themes, CSIS has commissioned 7 experts to unpack the economic and geostrategic implications of China’s infrastructure development across the Indo-Pacific region. The overall conclusion is mixed. China’s MSR projects are neither purely military nor purely commercial. Moreover, China’s overall approach is probably evolving.
EFFORTS TO DISCOVER THOSE RESPONSIBLE FOR CHEMICAL WEAPONS USE IN SYRIA AT A STANDSTILL, UN SECURITY COUNCIL TOLD
On 4th April, UN News reported that the Joint Investigative Mechanism (JIM) of the Organisation for the Prohibition of Chemical Weapons (OPCW) and UN was created in 2015 by the Council, but its mandate expired in November 2017. However, of chemical weapons production sites declared by Syria, destruction of the 2 remaining facilities will be verified by the OPCW and is expected to be completed within 2 to 3 months from the start of destruction. As for the allegations of the use of chemical weapons that were brought to the attention by the Syrian Government, the OPCW fact-finding mission is currently in Damascus to determine if such weapons were used. The mission, however, is not mandated to determine who used them.
CATCHING A CHINESE IP THIEF: HOW THE FBI TRACKED AND CAUGHT SINOVEL
The Cipher Brief on 5th April reported that resentment, an insatiable appetite for women and an even larger appetite for cash are all elements that led to an insider threat that spelled a devastating theft of US technology by a Chinese company. But this time, it says, the culprit was caught – or at least, the company behind him was. In January, Chinese wind turbine manufacturer Sinovel Wind Group Co. Ltd. Was found guilty on all counts of stealing the software technology of AMSC, a US company. The investigation of Sinovel, an 18% Chinese state-owned enterprise, dates back to 2010 when AMSC engineers inspecting a Sinovel wind turbine in the Gobi Desert in NW China suspected their proprietary control system software, which operates as the brains of a wind turbine, had been hacked by Sinovel.
US REPORTED TO BE POISED TO IMPOSE NEW SANCTIONS ON RUSSIAN BILLIONAIRES
Rferl on 5th April reported claims that the US plans to impose a new round of sanctions on Russia, this time targeting Russian billionaires with ties to President Vladimir Putin – with new sanctions will target wealthy people on a list released in January by the Treasury Department, which includes such prominent figures as Aleksei Miller, the CEO of the Russian gas giant Gazprom, and Igor Sechin, the chief executive of Russia’s state-run oil giant Rosneft.
THE MYSTERY OF WHO OWNS SHERLOCK HOLMES’S £130 MILLION HOME
Quartz on 5th April carried an article, valued at more than £130 million, the property spanning 215 to 237 Baker Street is held via a web of secretive offshore corporations which hide its owner’s identity. It is notorious among anti-corruption activists. The UK government also cited the buildings in its 2017-2022 Anti-Corruption Strategy.
IMPORTING ANIMAL FURS AND SKINS INTO UK AND EXPORT OF FISH
On 5th April, HMRC reissued guidance on the prohibitions and restrictions on the import of animal furs and skins into the UK and the export of salmon and trout.
CYPRUS MAKES PROGRESS IN COMBATING CORRUPTION, COUNCIL OF EUROPE SAYS
On 5th April, the Cyprus Mail reported that Cyprus has received praise from the Group of States Against Corruption (Greco) for having taken a series of measures aimed at combating corruption in public life and boosting transparency in government.
SPAIN READIES DRAGNET FOR CRYPTO TAX EVASION
Bloomberg on 5th April reported that Spain’s Tax Agency has asked financial firms to turn over names and trading data on cryptocurrency buyers, launching the country’s biggest dragnet yet for potential tax evasion and money laundering using digital currency. 60 companies were sent requests for trading information including banks and securities firms as well as currency platforms. The drive originated in part from a probe by the National Fraud Investigation Office on bank accounts opened abroad by foreign-exchange shops, according to the official. Spain is trying to crack down on online tax evasion with authorities said to be increasing demands on Internet-based companies, including Airbnb Inc., to reveal client identities.
KOREA: COINNEST CEO ARRESTED FOR EMBEZZLEMENT, FRAUD
The Korea Joongang Daily on 5th April reported that the CEO of a local cryptocurrency exchange was arrested on charges of embezzlement and fraud, the first time that the head of an exchange has been detained in Korea. Coinnest opened its service in July last year, becoming the 5th largest trading platform in Korea.