18th April 2018
WITH SALES SLUMPING AT HOME, US GUN MAKERS READY FOR EASED EXPORT RULES
News Chief on 17th April reported that US gunmakers are on the verge of getting something they’ve wanted for a very long time: a streamlined process for exporting their handguns and rifles, including AR-15 assault-style weapons that have been the focus of national debate. A large number of commercially available rifles and handguns would move off a munitions list controlled by the State Department and onto a different one at the business-friendly Commerce Department. It says that the market for exports of commercially available rifles and handguns is relatively small. Overseas shipments of revolvers and pistols totalled just under $117 million last year, while shipments of target-shooting rifles totalled about $17.1 million; exports of AR-15 and other assault-style weapons (known technically as centerfire auto-load rifles) came to $13.3 million, according to the International Trade Commission.
SMUGGLING OF USED MATTRESSES PERSISTS AT TEMA PORT IN GHANA
Graphic Online on 17th April reported that shipping containers loaded with used mattresses have arrived at the Jubilee terminal of the Tema port and are currently being carted away in trucks. It says that in January it reported that a scheme comprising officers at the Customs Division of the Ghana Revenue Authority (GRA) and rogue importers are taking advantage of a “lousy” import ban on used mattresses to ship the product through the noses of law enforcers into the country. The government placed a total ban on the importation of used mattresses and other used products from entering the country in 1994, citing health concerns. The ban was also meant to allow local manufacturers to gain access to a larger market and expand their operations to create jobs for the unemployed.
MONTENEGRO OPPOSITION LEADER TRIED FOR MONEY LAUNDERING
Balkan Insight on 18th April reported that Nebojsa Medojevic, one of Montenegro’s opposition leaders, is going on trial for alleged money-laundering linked to the financing of the pro-Russian Democratic Front alliance during the October 2016 elections. Medojevic and 11 others were indicted by the Special Prosecution for Organised Crime for allegedly plotting to evade taxes and for money laundering.
6 ARRESTED AS GARDAÍ SEIZE €250,000 IN CASH IN INTERNATIONAL MONEY LAUNDERING OPERATION
The Journal in Ireland on 17th April reported that 6 people have been arrested and €250,000 in cash has been seized as part of an operation targeting a Dublin-based criminal gang. The operation targeted an Irish criminal gang based out of Ballymun who are involved in international cocaine trafficking. It is understood they are suspected of trafficking drugs to Australia and then laundering the proceeds back to Ireland.
http://www.thejournal.ie/garda-australia-seizure-3962499-Apr2018/
UK GOVERNMENT QUESTIONS INDEPENDENCE OF AUDIT REGULATOR
On 17th April, Accountancy Daily reported that the UK government has launched an independent root and branch review of the Financial Reporting Council (FRC), with the aim of putting the regulator and the UK at the forefront of corporate governance internationally. Meanwhile, it separately reported that the FRC is recruiting participants for a new investor advisory group (IAG), which will provide a regular forum for discussion and feedback on various issues, including the FRC’s strategy and plan, and new policies and standards on governance, stewardship, reporting and audit matters.
https://www.accountancydaily.co/government-questions-independence-audit-regulator
https://www.accountancydaily.co/frc-sets-advisory-group-broaden-investor-engagement
HOME TRUTHS – AN UPDATE ON MODERN SLAVERY IN THE UK
Penningtons Manches LLP on 17th April published an article, quoting a report from a UK charity and other research, says that the top nationality of victims of modern slavery in the UK is British. Overtaking Albanian and Vietnamese nationals, British adults and children are increasingly being referred for support to the NCA. It also says that a large number of UK Government suppliers are failing to produce an annual report in accordance with the Modern Slavery Act 2015.
FURTHER UPDATE TO THE CAYMAN REGISTER OF BENEFICIAL OWNERSHIP INFORMATION
On 6th April, Dillon Eustace published a briefing that starts by reminding one that in July, 2017 the Cayman Islands introduced legislation which require all Cayman Islands companies and limited liability companies (LLC) to take reasonable steps to identify, record and maintain the details of all `beneficial owners’ defined as including any individuals who hold, directly or indirectly, more than 25% of the shares, capital, voting rights or the right to appoint or remove a majority of the directors or managers of the company or LLC. The requirement also applies to those who do, or can, exercise necessary significant control and trustees who qualify as beneficial owners.
IATA LAUNCHES CERTIFICATION PROGRAMME FOR ANIMALS AND ENDANGERED SPECIES TRAVELLING BY AIR
The British International Freight Association on 17th April reported that IATA has launched a new standardised global certification programme to improve the safety and welfare of animals travelling by air. The Center of Excellence for Independent Validators for Live Animals Logistics (CEIV Live Animals) provides stakeholders across the air cargo supply chain with the assurance that CEIV Live Animals certified companies are operating to the highest standards in the transport of live animals. CEIV Live Animals also focuses on the importance to comply with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) requirements including the CITES Guidelines for the Non-Air Transport of Live Wild Animals and Plants available in the LAR. CITES is the legally-binding agreement with 183 Parties (182 States and the EU), regulating international trade in more than 36,000 species of animals and plants.
See also –
http://www.iata.org/whatwedo/cargo/live-animals/Pages/ceiv-animals.aspx
NEW BRIEFING: PROCEDURE AND FORMAT – OPTIONS FOR A UN TREATY ON BUSINESS AND HUMAN RIGHTS
On 17th April, the Global Policy Forum produced a briefing paper which starts by saying that in 2014, the Human Rights Council of the UN decided by a majority vote to establish a process to create a human rights treaty to regulate business activity. The briefing says that it is now time to explore the possible forms of such an instrument and set out the options for the way forward in the process. Good rules and procedures can make treaty negotiations move more effectively forward and open doors to getting the best advice and text into an agreement. The briefing looks at the choice of contents and format of the agreement, and at options for the institutional settings needed with regard to a bureau, the HRC Secretariat, the relationship to other UN entities and processes, and the financial questions to be solve. It also looks at options for participation of civil society organisations and business.
RUSSIA SEEKS INVESTORS TO TO DEVELOP THE MULTI-MODAL TERMINAL FACILITIES DUE TO SEAPORT LOGISTICS SHORTFALL
HK TDC on 18th April carried an article saying that, with expansion planned for the Western Arctic and Far Eastern basin seaports, the Russian government seeks public-private partnership deals in order to develop the multi-modal terminal facilities required to handle the increased throughput. Even with the EU/US sanctions still in place, the throughput at marine facilities has continued to grow, and the development focus has switched to the Western Arctic and Far Eastern basins. Plans for the expansion of the Far Eastern and Eastern Arctic seaports takes it as a given that the level of bulk cargoes – particularly grain – will continue to rise, with the presumption being that Russia’s raw materials and mineral exports will remain attractively priced on the global markets. Plans include extension of the Trans-Siberian Railway.
SOUTH AFRICA TO INCREASE FOCUS ON SPACE INDUSTRY
Defence Web on 17th April reported that South Africa will increase its focus on the space industry, particularly with regard to sustainable development, and will look at re-establishing space launch facilities, amongst other things. In the 1980s, the Overberg Test Range in the Western Cape was used for space launches. 4 South African space rockets were built, and 3 launched between 1989 and 1990, but without useful payloads. In the 1990s funding for South Africa’s space programme dried up and as a requirement to join the Missile Technology Control Regime (MTCR) in 1995, South Africa was forced to destroy much of its key facilities and technologies, including the launch pad at Overberg. However, the site has retained most of its space launch capabilities, including mission control centre, radar and telemetry tracking facilities, and range safety systems. South Africa has the capability to design and build satellites, but not launch them.
SOUTH AFRICA’S DAMAGED CRIMINAL INTELLIGENCE SYSTEM IS AT A CROSSROADS
The Institute for Strategic Studies on 17th April published an article about problems in the criminal intelligence framework in South Africa and what its new head will have to do the correct years of mishandling and corruption.
https://issafrica.org/iss-today/south-africas-damaged-intelligence-system-is-at-a-crossroads
CORRUPT SOUTH AFRICAN POLICE OFFICERS RUN RINGS AROUND WATCHDOG
Business Day on 18th April reported on a court case where the head of investigations for the Independent Police Investigative Directorate (Ipid) was asked to paint a picture of police corruption during the sentencing procedures of former Western Cape commissioner, Arno Lamoer, and 3 former brigadiers. He said investigating police was not an easy task because officers were acquainted with criminal investigation processes.
UK DRUG SEIZURES AND OFFENDING: SOCIAL INDICATORS PAGE
On 17th April, the House of Commons Library provided a summary of statistics on drug use, drug seizures and drug offences.
https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN02619
$2.6 BILLION CANADIAN FRAUD JUDGMENT AWARDED AGAINST FORMER SINO-FOREST CEO
On 17th April, Bennett Jones reported that an Ontario court had upheld a decision granting judgment for fraud and breach of fiduciary duty in its action against Allen Chan, the former CEO of Sino-Forest Corporation. The company was a publicly traded company with a market capitalisation of approximately $6 billion at its peak. Its principal businesses included the ownership and management of forest plantations, the buying and selling of standing timber, wood logs and wood products, and the complementary manufacturing of downstream wood products. Between August 2004 and October 2010, Sino-Forest used its apparent success to raise approximately $3 billion through debt and equity financing. Allegations in May 2012, alleging that Chan and other members of management “engaged in a complex fraudulent scheme to inflate the assets and revenue of Sino-Forest”. The RCMP has initiated no proceedings arising out of the Sino-Forest fraud.
https://www.jdsupra.com/legalnews/us-2-6-billion-fraud-judgment-awarded-56766/
NORTHERN IRELAND PROPERTY LINKED TO PARAMILITARIES RECOVERED
An NCA news release on 17th April reported that NCA officers working as part of the Paramilitary Crime Task Force (PCTF) in Northern Ireland have obtained a Civil Recovery Order by consent over a Newtownabbey property under the Proceeds of Crime Act 2002 (POCA). This is the first property to be recovered by the PCTF under POCA. The PSNI, HMRC and the NCA have established the PCTF to tackle criminality linked to paramilitary activity as part of the Executive’s action plan on Tackling Paramilitary Activity, Criminality, and Organised Crime.
http://www.nationalcrimeagency.gov.uk/news/1331-property-linked-to-paramilitary-group-recovered
MAN ARRESTED OVER SMUGGLING OF 150 LIVE TURTLES INTO HONG KONG FROM MAINLAND CHINA
The South China Morning Post on 18th April reported that a 19-year-old man has been arrested in Hong Kong over the smuggling of 150 live turtles – suspected to be an endangered species – from mainland China, the second case involving such animals in a month.
HONDURAS FINDS ANOTHER COCA FARM IN ORGANISED CRIME STRONGHOLD
On 17th April, Insight Crime reported on a discovery which it said is further contributing to suspicions that criminal groups have been experimenting with drug production in a country that has previously been known solely as a transit corridor. Officials said they dismantled a clandestine laboratory used to manufacture coca paste, a precursor to cocaine. It is said that the crops belonged to Colombian groups that could be testing “to see if the conditions are right for cultivating coca in Honduras”.
https://www.insightcrime.org/news/brief/honduras-finds-another-coca-farm-organized-crime-stronghold/
LITHUANIA PLOTS VIRTUAL LIMITED LIABILITY COMPANIES ON BLOCKCHAIN
Banking Tech on 17th April reported that Lithuania is looking to become the first ever country to offer entities from around the world the opportunity to register and manage companies using blockchain. Called virtual limited liability companies (VLLC), the idea is to offer a sandbox regulatory system that helps newcomers to set up operations, and allows companies to be remotely managed, and for “all share transactions to be fully transparent, as they would be performed entirely on an immutable blockchain”.
SOLICITOR “ABROGATED ANY RESPONSIBILITY” FOR FIRM’S FINANCES WHILE PARTNER USED MONEY TO FUND GAMBLING HABIT
Legal Futures on 18th April reported that a solicitor who allowed her fellow partner to take £512,000 from its accounts over 5 years to feed his gambling habit, has been fined £20,000 by the Solicitors Disciplinary Tribunal (SDT). Their law firm, MKM Solicitors, based in East London, was closed by the SRA in March 2017.
NATIONWIDE GERMAN RAIDS TARGET THAI FORCED PROSTITUTION RING
France 24 on 18th April reported on what was described as the “biggest operation in terms of manpower in the history of the federal police force”, some 1,500 officers swooped on 63 brothels and flats in 12 of Germany’s 16 states. Authorities say a “core group” of 17 suspects “smuggled Thai women and transsexuals into Germany with fraudulent Schengen visas”. Those brought to Germany “had to hand over 100% of their wages to the operators of the respective ‘massage parlours’ to pay off their smuggling fee” of between €16,000 and €36,000 euros.
http://www.france24.com/en/20180418-nationwide-german-raids-target-thai-forced-prostitution-ring
SOUTH AFRICA AUDITOR GENERAL CANCELS ALL CONTRACTS WITH KPMG
KYC 360 on 18th April reported that, in the wake of the Gupta and other scandals, South Africa’s Auditor General said he is terminating all contracts with auditing firm KPMG after events have cast doubt over the international audit firm’s professional and ethical conduct.
https://kyc360.com/news/south-africas-auditor-general-cancels-contracts-kpmg/
BELGIUM “ILLEGALLY SHIPPED 96 TONNES OF SARIN PRECURSOR TO SYRIA”
Bellingcat, the investigative website, claimed on 18th April that Belgian companies have violated EU sanctions against Syria, according to the summons of an upcoming lawsuit. A criminal case regarding exports of chemicals to Syria has been opened in Antwerp Criminal Court. This case is brought by the Belgian Customs against 3 Flemish companies, 1 managing director and 1 manager. Belgian companies are said to have exported 96 tonnes of isopropanol, a sarin precursor, to Syria between 2014 and 2016. It explains that isopropanol, also known as isopropyl alcohol, is considered a “dual-use” product, much like chlorine, which has ordinary industrial uses (such as in the manufacturing of pharmaceuticals or acetate, where it is favoured due to its low toxicity and small amount of residue) [and logic demands that some, at least, of the chemical was used for those legitimate uses, such as a solvent in the paint and varnish industry, as a disinfectant in health care and as a coolant]. It can also be used in the synthesis process when manufacturing chemical agents such as the nerve agent sarin. The article says that UN Comtrade statistics show that Belgium was the only EU Member State that continued to export (iso)propanol to Syria since EU sanctions were imposed in 2013. Belgian Customs says it has no indication that the isopropanol exported from Belgium has been used for the production of sarin.
OFAC AMENDS DETAILS OF 1 ENTRY ON RUSSIAN SANCTIONS LIST
On 18th April, OFAC announced amendment of the details for the RUSSIAN FINANCIAL CORPORATION (aka RFK-Bank, RFC-Bank etc), the amendment being to the listed addresses.
https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20180418.aspx
G7 FINANCE MINISTERS JOINT STATEMENT ON NORTH KOREA
On 18th April, the US Treasury published a news release containing a joint statement by the G7 countries on North Korea which said that the countries would continue to take action to impose maximum economic pressure on North Korea, in keeping with relevant UN Security Council Resolutions. The G7 said they were concerned by North Korea’s evasion of international sanctions and its continued ability to access the international financial system. North Korea does little business in its own true name and uses a network of agents, front and shell companies, and complex ownership structures to access the international financial system. They noted that, as the UN Panel of Experts noted in its March 2018 report, in 2017, more than 30 representatives of North Korean banks have been operating outside of North Korea, in contravention of UN SCR and noted that DPRK trade representatives continue to play a role in the country’s prohibited programs, including by acting as fronts for designated entities and individuals, as well as engaging in commercial activities that violate the UN SCR. The G7 calls on all countries to fully and effectively implement their UN SCR obligations with respect to North Korea and, in this regard, to expeditiously expel these bank and trade representatives in accordance with their UN obligations. The G7 also called on countries to similarly engage their financial institutions so they will be on alert and take steps to implement necessary additional scrutiny to ensure that they are not processing transactions on behalf of sanctioned North Korean entities.
https://home.treasury.gov/news/press-releases/sm0350
NEW EU RULES TO MAKE PARCEL DELIVERY MORE AFFORDABLE SIGNED INTO LAW
The EU announced on 18th April the signature into law in Strasbourg of the proposal to make prices for cross-border parcel delivery services more transparent and affordable and to increase regulatory oversight of the EU parcel market. The new EU Regulation will allow consumers and companies, in particular SME, to buy and sell products and services online more easily and confidently across the EU. For more information see –
http://europa.eu/rapid/press-release_MEMO-17-5246_en.htm
DAPHNE PROJECT: NEW ZEALAND LINK TO AZERI MONEY?
Radio New Zealand on 18th April reported that an Auckland company may be caught up in an international money laundering controversy after it was identified helping to manage a network of New Zealand-registered companies and trusts for its secret clients. Sources claim this network leads back to the Azerbaijan government, which has been accused of corruption and money laundering, and were uncovered as part of the Daphne Project media investigation involving 46 journalists from 16 countries created to pick up the work of Maltese journalist-blogger Daphne Caruana Galizia, who was reporting on Maltese government corruption and Azerbaijan-linked money laundering when she was murdered by a car bomb in October 2017.
FOCUS ON LITHUANIAN SERIOUS CRIME: 19 ARRESTS AFTER 2-YEAR INVESTIGATION
Europol on 18th April reported on one of the largest covert police operations the country has seen in recent years which has culminated with the arrest of 19 suspects and targeting an organised crime group based in the country.
SOUTH KOREAN COURT FREEZES FORMER PRESIDENT LEE’S ASSETS
The Korea Joongang Daily in its 19th April edition reported that a court had approved prosecutors’ request to freeze the assets of former President Lee Myung-bak, who faces multiple charges of corruption.
http://koreajoongangdaily.joins.com/news/article/Article.aspx?src=ilaw&aid=3047128
UK TIMBER AND TIMBER PRODUCTS (PLACING ON THE MARKET) REGULATIONS 2013: POST IMPLEMENTATION REVIEW
On 18th April, DEFRA reported on the review of the effectiveness of the Timber and Timber Products (Placing on the Market) Regulations 2013 after 5 years in force. The Regulations implemented EU Regulation 995/2010 and make it an offence to place illegally harvested timber and timber products on the EU market for the first time. It also requires operators to implement a due diligence system to mitigate the risk of placing illegal timber on the market.
SFO TO ‘FRONTLOAD’ DUE DILIGENCE CHECKS ON EXPERT WITNESSES AFTER LIBOR CASE
The Law Society Gazette on 18th April reported that the SFO has said it is making changes to ensure that expert witnesses it instructs in future trials are sufficiently capable, including prioritising due diligence checks, following a judgment in which the office was heavily criticised for its use of a witness.
NEW US SANCTIONS AGAINST RUSSIA CREATE UNIQUE ISSUES FOR FUND INVESTORS
Morgan Lewis in a Lawflash Alert on 18th April says that the latest round of US sanctions designations affect a broad swath of investment holdings – especially when compared to previous Russia sanction actions by the US government – as previous OFAC Russia sanctions largely designated entities under so-called “sectoral sanctions” which prohibit certain specified dealings with sanctioned entities. However, under the latest sanctions all types of activities are prohibited, and those designated are completely cut off from any dealings with US persons. It points out the “50% rule” also applies where 2 (or more) named targets collectively own 50% or more of a company’s stock (wherever located), leading to that company being treated as if designated for sanctions purposes, with US persons are prohibited from transactions with that entity. As well as asking some questions about winding down or ending contacts, the article says that there are some additional considerations from an investor perspective.
https://www.jdsupra.com/legalnews/new-us-sanctions-against-russia-create-63287/
PODCAST: COST-EFFECTIVE INTERNAL INVESTIGATIONS
In the latest TRACE podcast, Jeff Clark of Willkie Farr & Gallagher provides comprehensive guidance for planning and executing internal investigations and leveraging resources.
https://www.traceinternational.org/bribe_swindle_or_steal
MONTENEGRO OPPOSITION LEADER TRIED FOR MONEY-LAUNDERING
Baker McKenzie reported on 18th April that the trial of Nebojsa Medojevic, one of the leaders of Montenegro’s strongest opposition alliance, the Democratic Front, and 11 others opens in Podgorica. They were indicted by the Special Prosecution for Organised Crime for allegedly plotting to evade taxes and for money laundering to finance the pro-Russian Democratic Front’s campaign for the October 2016 general elections.
http://www.riskandcompliancehub.com/montenegro-opposition-leader-tried-for-money-laundering/
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