24th April 2018
US COURTS’ DISMISSAL OF CLASS ACTION AGAINST INTERNATIONAL BANK FOR ALLEGED AML CONTROL MISREPRESENTATIONS
On 20th April, Buckley Sander LLP published an article saying that on 13th April a district court’s dismissal of a proposed class action had been upheld. The claim had allegedthat an international bank misrepresented the effectiveness of internal controls to investors, during a time when Russian traders were laundering more than $10 billion through the bank. In May 2016, investors filed a class action complaint against the bank alleging securities law violations for touting its compliance efforts while Russian clients were engaging in “mirror trades”.
AML AND FRAUD DEVELOPMENTS IN THE BVI
On 23rd April, law firm Harneys produced an article on recent developments re AML and fraud in the BVI.
BRIBERY ACT CASE FLAGS NEED FOR ACTIVE PREVENTION IN UK
On 19th April, chartered secretaries’ association, ICSA, published an article saying that the outcome of a recent failure to prevent bribery case shows how seriously prosecutors are taking compliance. Corporations in the UK are facing pressure to not merely abstain from crime, but to actively prevent their staff committing it. Where once companies would not be culpable for the misbehaviour of staff, they are now being asked to have adequate measures in place to stop tax evasion and bribery, or face punishment. After the Home Office published an anti-corruption strategy in December, some campaigners called for this approach to be applied to other types of economic crime.
UWO AND THE STEADY EXPANSION OF EXTRA-TERRITORIAL JURISDICTION OVER FINANCIAL CRIME IN THE UK
On 19th April, Bright Line Law published an article which sets out to examine the ever-expanding jurisdiction of UK criminal courts over extra-territorial conduct, persons, and property.
LAB-GROWN DIAMONDS THREAT TO BIG MINERS – BUT HOW MIGHT PATENTS PLAY THEIR PART?
On 23rd April, Urquhart-Dykes & Lord LLP published an article (originally published on 4th December) following an October FT article which discussed why/if lab-grown diamonds pose a threat to big miners such as De Beers in the diamond jewellery sector. While sales of laboratory -grown diamonds are currently only about 2% of supply in this multibillion dollar sector, it is reported that they are expected to reach 10% by 2030 and perhaps more. Speed of growth is linked to changing consumer taste and reduced costs.
US UKRAINE-/RUSSIA-RELATED GENERAL LICENCES; PUBLICATION OF NEW FAQ
On 23rd April, OFAC issued a news release saying that General License 14 authorises US persons to engage in specified transactions related to winding down or maintaining business with United Company RUSAL PLC (RUSAL) and its subsidiaries until October 23rd 2018. The FAQ include a clarification that, in accordance with preexisting OFAC guidance, OFAC will not impose sanctions on foreign persons for engaging in the same activity involving RUSAL or its subsidiaries that General License 14 authorises US persons to engage in. OFAC is also issuing another new licence, Ukraine-/Russia-related General License 12A, which replaces and supersedes General License 12 in its entirety.
CIGARETTE SMUGGLING IN BULGARIA FOR Q4 2017 AT 6.6%
Focus FEN on 23rd April reported Cigarette smuggling in Bulgaria for the 4th quarter of 2017 was at 6.6%, according to data from a survey conducted by tobacco companies. Compared to the previous quarter, it is an increase of 0.6%, but on an annual basis the decrease is 1.2%. The event was devoted to the fight against illegal trade. The survey covered 20 major cities in the country or 47% of the population. 10 cities are above the average level, and the remaining 10 are below average. The survey shows that Bulgaria ranks well compared to other EU countries. The UK and Ireland are at the top of the list with 30 to 38% of smuggled tobacco.
HELICOPTER-FLYING DRUG DEALERS SMUGGLED COCAINE THROUGH LYDD AIRPORT AND LANDED ON HELIPADS AT 2 KENT HOTELS
Kent Live on 23rd April reported that 3 men pleaded guilty to drug offences and 2 have already been sentenced. The gang used a helicopter to fly £7 million worth of cocaine from Europe to the UK.
CROOKED EX-COP RAN GREEK TOBACCO SMUGGLING GANG
On 23rd April, Ekathimerini reported that a tobacco smuggling gang was led by a retired policeman, according to a spokesman for the Greek Police (ELAS). The former officer, 56, and 2 other men, 47 and 60, were arrested in co-ordinated police sweeps. Police said that the three men operated out of four warehouses, which they had transformed into factories that processed, produced and packaged contraband cigarettes and tobacco. The warehouses were also used to store contraband tobacco products.
STOLEN CALIFORNIA SUCCULENTS SMUGGLED TO ASIA
Herald Net on 23rd April reported that state wildlife officials say they have uncovered an international scheme in which thieves from Korea and China slip into wild landscapes in Northern California to pluck succulents to sell on the thriving black market in Asia. The succulents, called Dudleya farinosa, fetch up to $50 each in Asia, where a growing middle class is fueling demand. Since an investigation started in December, state officials have nabbed suspects from China and Korea in 3 separate thefts along the Humboldt and Mendocino coast and recovered thousands of plants.
EU COMMISSIONER PLANS MALTA ‘MONEY LAUNDERING’ INSPECTION
On 23rd April, the EU Observer reported that Vera Jourova, the European Commissioner for Justice, told reporters she will go to Malta in the coming weeks to see how to improve the country’s the Financial Intelligence Analysis Unit, which probes money-laundering issues. She will also look into the ongoing investigation of assassinated journalist Daphne Caruana Galizia.
PRIME MINISTER: WE HAVE UNTIL JULY TO CLEAN UP LATVIAN BANKING SECTOR
LSM on 24th April reported that Prime Minister Māris Kučinskis has said that Latvia has until July to show that it has taken real measures to tackle the problem of large-scale money laundering in its banking sector.
DISCHARGED BANKRUPT STILL LIABLE FOR DEBT INCURRED THROUGH DISHONEST ACTIONS
In its Financial Litigation newsletter for April, law firm Gowling WLG reported that the English High Court has recently considered the meaning of fraud in the exception under s 281(3) of the Insolvency Act 1986 (IA). It reminds one that the purpose of the qualification in s.281(3) IA is to prevent a person from using the process of bankruptcy or invoking his bankruptcy and discharge therefrom as a medium for becoming free from debts and liabilities resulting from his actual dishonesty. It is an anti-avoidance and preservative provision aimed at continuing the rights of a creditor who has been defrauded by the bankrupt.
OLAF: ILLICIT CUT TOBACCO IS A SIGNIFICANT AND GROWING MARKET
EurActiv on 24th April reported that, according to OLAF, volume of illicit cut tobacco in Europe poses a significant problem and is a growing market. Its director of policy is quoted as saying that trends suggest that the illicit cut tobacco products account for a high share of the overall cut tobacco market in Central and Eastern European countries. The article explains that illicit cut tobacco, also called “chop-chop” or “bulk tobacco”, is a type of tobacco that is cut or shredded, usually sold in pouches or bags and smoked in handcrafted cigarettes (roll-your-own or make-your-own). This product is typically priced by weight and packed in unbranded bags. It is sold as loose or cut/shredded tobacco leaf outside legitimate sale channels. Studies suggest that the effect is €1 billion in lost revenue across 15 European markets. EU policymakers fear that Free Trade Zones, such as the one located in Podgorica in Montenegro, are used in order to circumvent tax and products regulation. However, overall legal tobacco consumption in the EU is steadily declining. The article says that traditionally the illicit tobacco trade has been dominated by counterfeiting, but “illicit whites” steadily dominate the market. These cigarettes may be legally produced but are then smuggled and traded illegally. OLAF emphasises that a particular problem area is the smuggling of cheap whites across the EU’s Eastern Border.
OLAF SUSPECTS VAT FRAUD AT CHINA’S NEW GATEWAY TO EUROPE
EurActiv on 24th April carried an article saying that EU and Italian authorities are investigating suspected wide-scale tax fraud by Chinese criminal gangs importing goods via Greece’s largest port of Piraeus, a trade gateway between China and Europe.
ORGANISED CRIME THREATENS UGANDA’S THRIVING GOLD TRADE
Defence Web on 24th April reported that gold has become one of Uganda’s top exports, but multiple questions surround this glittering trade. The gold trade was worth $200 million to the Ugandan economy last year, but there are no official figures on where the gold came from, or where it is going’, the campaign leader in Uganda for NGO Global Witness told CNN shortly after a report was released in June 2017 on the trade in minerals from the Democratic Republic of the Congo (DRC) and South Sudan passed through Uganda on their way to international markets. The article also says that a second report, submitted by the UN Group of Experts to the UN Security Council in August 2017, identified Uganda as a major transit route for the illicit smuggling of gold from the DRC to the UAE. The UN Group of Experts traced the flow of gold exploited, taxed and trafficked by armed groups – particularly the FDLR (the Democratic Forces for the Liberation of Rwanda) and other militia groups operating in eastern DRC.
SOME US ALLIES AFFECTED BY SANCTIONS IN OBTAINING RUSSIAN ARMS
Defence Web on 24th April reported that US sanctions on Russian military exports have put the brakes on a $6 billion deal with India and may derail the arms purchases of other US allies around Asia. Any country trading with Russia’s defence and intelligence sectors will face sanctions. But US allies who buy weapons and equipment from Russia, the world’s second-largest arms exporter, could suffer as well. This is because the effects of the US sanctions law could be more sweeping than intended, said Cara Abercrombie, a visiting scholar at the Carnegie Endowment for International Peace.
8 ARRESTED IN CHINA FOR MASSIVE PONZI FRAUD
The Shanghai Daily in its 25th April edition reports that 8 suspects who were allegedly involved in a Ponzi scheme worth US$9.6 billion have been arrested. Zhou Boyun, the legal representative of Shan Lin Financial, the company which reportedly operated the scheme, turned himself in to the police on April 9th. The company was established in 2013 and registered at the Shanghai free trade zone. Zhou has opened over 1,000 branches since October 2013 without any permit. Staff were recruited and trained to sell the financial products on which the company promised high returns of 5.4% to 15%, police said. Zhou opened 4 online platforms since 2015 to sell the same products.
THE ANATOMY OF CONSTRUCTION CORRUPTION IN NEW YORK
The Real Deal, which focusses on the real estate sector in New York, carries an article in its April 2018 edition saying how bribery and overbilling schemes have become commonplace in the world of real estate’s middlemen – in the $45.3 billion construction industry.
GLOBAL INDUSTRIAL GIANT TECHINT FACES MULTINATIONAL MONEY-LAUNDERING AND BRIBERY ALLEGATIONS
OCCRP on 24th April reported that the Techint group operates steel and iron factories, manufactures gas and oil pipelines and builds energy plants. It has been controlled by a family dynasty, and has been a mainstay of both the Italian and Argentinian economies since WW2. The $25 billion group, which reportedly includes 450 operating companies and a 75,000-strong workforce in 45 countries, has never before faced questions about the probity of its worldwide financial operations. It is said that journalists claim to have uncovered a previously unknown web of offshore entities used by Techint associates to shuffle money through tax havens and to pay bribes to Brazilian state companies. Denying the allegations, Techint’s Swiss and Italian subsidiaries told L’Espresso that the company would prove its innocence in court.
BELGIUM’S “CAYMAN TAX” – €510 MILLION BUDGETED FOR AND €5 MILLION COLLECTED
The Brussels Times on 24th April reported that the Cayman tax, which targets the sums that Belgians have placed in tax havens, only brought in €5 million last year – a mere 1% of the €510 million which the Finance Minister had forecast in the 2017 budget.
ASEAN: TACKLING FINANCIAL CRIME THROUGH BIG DATA
On 24th April, Thomson Reuters Financial and Risk produced an article which said that the fight against financial crime will be a major talking point at this year’s ASEAN Regulatory Summit on 8th May, in particular the value of data analytics and cross-border public-private information-sharing. It says that there needs to be a fundamental re-think of the current AML system, because the current regime is just not effective, and its inefficiencies pose a significant risk to the integrity of the global financial system, undermining public trust in the process. However, no single party can combat financial crime alone. As regulators require banks to make more stringent checks on their customers and perform rigorous due diligence to fulfil their compliance obligations, it’s crucial to use all the tools at our disposal to step up the fight against financial crime.
NORWAY TO FURTHER RESTRICT PAYMENT TO INTERNATIONAL GAMBLING SITES
Calvin Ayre on 24th April reported that Norway’s government is proposing new methods of curbing competition of the state-owned gambling monopoly, including stricter monitoring of online gambling payment processing. Lotteri-og Stiftelsestilsynet (Norwegian Gaming Authority) began a consultation on its proposals to further restrict internationally licensed online gambling operators’ access to Norwegian gamblers. The consultation will be open until August 15th.
EUROPEAN SANCTIONS BLOG AWARD
Congratulations to the always up to date European Sanctions Blog which, on 24th April, reported that it has been selected as one of the ‘Top 30 European Law Blogs’ by Feedspot. The award is based on reputation and search ranking, influence and popularity on social media sites, quality and consistency of posts, and editorial team and expert review.
UN AMENDS 1 ENTRY ON ITS YEMEN SANCTIONS LIST
On 24th April a UN news release advised that the entry for ALI ABDULLAH SALEH had received minor amendments.
UK MIXED PAPER EXPORTS SLIDE 13%-PLUS IN EARLY 2018
Customs Today on 24th April reported that overseas shipments of mixed paper dropped from 264,049 tonnes in early 2017 to 229,425 tonnes, not least because of China’s new import stance. Combining the figures for all grades of recovered fibre, UK exports were 3.6% lower in the first 2 months of this year.
SHIP FIRE FORCES THE END TO DFDS LOSS-MAKING ROSYTH-ZEEBRUGGE RO-RO SERVICE
Loadstar on 24th April reported that a major ship fire has injured 1 crew member and forced DFDS to cancel its “loss-making” Rosyth-Zebrugge ro-ro route. The fire aboard Finlandia Seaways happened on 16th April in the engine room, with the injured crew member being airlifted to hospital and treated for smoke inhalation.
UNODC-WCO CONTAINER CONTROL PROGRAMME REPORTS RECORD HIGH COCAINE SEIZURES IN LATIN AMERICA AND THE CARIBBEAN
The UN Office for Drugs and Crime on 24th April reported that the UN/WCO Container Control Programme (CCP), seek to improve the capacity of customs and law enforcement officials in Latin America and the Caribbean, among others, to detect and disrupt the flow of illicitly trafficked goods, while facilitating legitimate trade and raising state revenues. In 2018, the joint customs and police Port Control Units (PCU) have made significant seizures of drugs, precursor chemicals, merchandise breaching Intellectual Property Rights (IPR) and protected wildlife. UNODC experts cited 18 operations that netted more than 8.9 tonnes of drugs in addition to the detention of 18 containers due to IPR infringements. CCP operates in 14 countries in Latin America and the Caribbean, including Argentina, Brazil, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Panama, Paraguay, Peru and Surinam. The Programme soon will expand to Bolivia and Colombia while negotiations with Mexico are ongoing.
EU CASE COULD CALL ENTIRE FRAMEWORK FOR INTERNATIONAL DATA TRANSFERS INTO QUESTION
Out-Law on 24th April carried a briefing saying that the EU’s highest court is being asked to consider whether one of the main methods used by businesses to move personal data out of the EU is legal. The CJEU is being asked 11 questions by the High Court in Ireland that could lead to it preventing businesses from relying on ‘model clauses’ to transfer personal data from the EU to ‘third’ countries, against what is provided for in EU data protection law. The questions posed by the Irish court stem from an investigation by the country’s data protection authority into whether the use of model clauses to facilitate EU-US data transfers ensures compliance with EU data protection laws.
CAYMAN ISLANDS INSISTS MONEY LAUNDERING REPORTING CANNOT BE DELEGATED TO THIRD PARTY
Baker McKenzie on 24th April reported that Cayman Islands investment funds must, from 1st June, appoint natural persons as their MLRO, rather than delegating their AML functions to corporate bodies. New AML regulations came into force on 2nd October, making both regulated and unregulated investment entities, as well as insurance entities and finance vehicles, subject to the AML regime and mandatory procedure obligations. The reforms were necessary in order to comply with the Caribbean Financial Action Task Force’s inspection at the end of 2017.
LGA “EXTREMELY CONCERNED” AT REPORTED BLOCKING OF PLANS TO CUT MAX FOBT STAKES IN UK
Local Government Lawyer on 24th April reported that the Local Government Association has expressed concern at reports that plans to reduce the maximum stakes on fixed odds betting terminals (FOBTs) have been blocked by the Treasury.
MONEY LAUNDERING – RECENT CASES FROM A EU BANKING SUPERVISORY PERSPECTIVE
On 24th April, the EU Parliament’s research service produced a briefing which provides some insight into recent cases of breaches or alleged breaches of AML rules by supervised banks and discusses which indicators may point to a potential money laundering problem. The briefing also outlines the respective roles of European and national authorities in applying AML legislation that have been further specified in the 5th AML Directive adopted by the EU Parliament Plenary on 19th April.
25th April 2018
US BARS 168 ARMS EXPORT CONTROL ACT VIOLATORS
On 24th April, American Shipper reported that the US State Department had announces the names of 168 individuals and entities banned from exporting defence articles that require a State Department licence. It also notes that the International Traffic in Arms Regulations require anyone who has knowledge that another person is subject to debarment to refrain from participating directly or indirectly in any ITAR-controlled transaction in which the ineligible person might benefit or have a direct or indirect interest therein, unless State’s Directorate of Defense Trade Controls provides written approval.
UK MAGNITSKY LAW
On 24th April, in its UK and US sanctions update, K & L Gates noted that section 13 of the Criminal Finance Act 2017 came into force on 31st January, inserting ‘Magnitsky-style’ provisions into UK law that can target officials responsible for human rights abuses. This, it notes, expands the current definition of ‘unlawful conduct’ in the Proceeds of Crime Act 2002 to include conduct occurring outside of the UK, which ‘constitutes, or is connected with, the commission of a gross human rights abuse or violation’. The enforcement provisions now permit recovery orders and property freezing orders for property obtained via such ‘unlawful conduct’.
UK SELLS $445 MILLION OF ARMS TO ISRAEL, INCLUDING SNIPER RIFLES
The Middle East Eye claiming an exclusive reported on 24th April that the UK has approved the sale of arms to Israel worth $445 million since the 2014 Gaza war, including components for drones, combat aircraft and helicopters along with spare parts for sniper rifles, according to figures seen by Middle East Eye. It says that arms export licences to Israel soared to £216 million last year from £20 million in the wake of the Gaza war, new Department for International Trade figures show. However, this increase is boosted by a major £183 million licence covering “technology for military radars”, but ministers have also approved the sale for export of grenades, bombs, missiles, armoured vehicles, assault rifles, small arms ammunition, sniper rifles and components for sniper rifles.
BOLIVIA: CHINESE CONTRABAND GARLIC AFFECTS LOCAL PRODUCT
The Fresh Plaza website reported that Chinese garlic, which is smuggled into the country, floods the local market and is sold at 40% less than the national product, which negatively affects national producers. It says that 25 lb of national garlic arroba costs 190 to 200 bolivianos in the most populous markets of the city, while that of Chinese origin costs 160 to 170 bolivianos.
PAIR JAILED FOR RECYCLING TAX SCAM INVOLVING IT EQUIPMENT
MRW on 24th April reported that 2 businessmen have been jailed for running a bogus IT recycling operation for a gang which was convicted of a £2.6 million tax fraud. The businesses, Recycle Technology and CMS Computer Monitor Services, were run for a 23-strong gang, whose members were jailed in 2016 for a total of 54 years. They claimed to repair computer monitors before selling them to customers in Africa, but HMRC investigators found this was a scam to steal VAT repayments, with each stage of the transaction chain backed up with fake documents.
PILATUS BANK UK BRANCH CLOSED
Malta Independent on 24th April reported that Pilatus Bank’s UK branch has been closed down according to the UK’s Prudential Regulation Authority. Pilatus Bank had established a registered branch in the UK, passporting in as an authorised EEA firm. They also said that the bank has a registered freedom of services passport in the UK.
ANGOLAN TYCOON’S FROZEN FUNDS HIGHLIGHT KPMG ROLE IN OFFSHORE SECRECY
The ICIJ on 23rd April reported that Mauritian authorities have frozen 91 bank accounts linked to investor Jean-Claude Bastos, a key figure from the Paradise Papers with close connections to Angola’s former leaders. The Mauritius Supreme Court froze accounts in 4 judgements issued this month as part of probes involving Bastos and part of a $3 billion Angolan sovereign wealth fund investment, according to Mauritian newspaper L’Express. Mauritius’ offshore regulator also suspended the licenses of 7 investment companies linked to Bastos’ Zurich-based management company, Quantum Global. The article says that KPMG worked with Bastos and Quantum Management in Mauritius as tens of millions of dollars were shuffled by them from Angola to Mauritius and beyond.
VALUATION PROCEDURES UNDER THE UNION CUSTOM CODE – EARLIER SALES CONCESSION WITHDRAWN
On 25th April, HMRC published Customs Information Paper 5 about the withdrawal of the importers transitional arrangement for the earlier sale provision on 31st December 2017. From that date all importers and their agents may no longer declare an earlier sale as the basis for the customs value. Previously, where there was a series of sales before the importation of the goods, any sale in the supply chain prior to the last sale which led to the introduction of the goods into the customs territory could potentially be used as the basis of the customs value.
ICELANDIC FUGITIVE IN BITCOIN HEIST ARRESTED IN AMSTERDAM
Gambling 911 reported on 25th April that Amsterdam police have arrested an Icelandic fugitive suspected of masterminding the theft of hundreds of computers used to mine bitcoin and other virtual currencies. Stefansson fled a low-security prison and flew to Sweden. Icelandic officials said it was unlikely that Stefansson had to show a passport at the airport since he travelled within Europe’s passport-free travel zone but the plane ticket he used was under someone else’s name. Stefansson was among 11 people arrested for allegedly stealing the computers in a series of burglaries in December and January.
G7 SECURITY MINISTERS COMMIT TO TACKLING MODERN SLAVERY WORLDWIDE
A new release from the UK Home Office on 25th April said that ministers from the G7 have agreed to 9 commitments aimed at protecting the most vulnerable from trafficking and forced labour.
SOUTH AFRICA: POLICE RHINO ARREST SPARKS CALL FOR LIFESTYLE AUDIT
Defence Web on 25th April reported that the arrest of a policeman based at Skukuza in Kruger National Park in connection with allegations of poaching has been noted by Parliament’s Police Portfolio Committee with a call for vetting of all police officers near national parks.
US TO LOWER FOREIGN ARMS SALES SURCHARGE
Defence Web on 25th April reported that the US government will reduce its administrative surcharge on foreign arms sales to 3.2% from 3.5% from June as part of a broader bid to make US weapons more competitive internationally, a top US official told Reuters. The US government assessed the surcharge on the full value of all government-to-government foreign arms sales to cover its administrative costs, and avoid any charge to US taxpayers for such transactions. The move comes days after the Trump administration announced an overhaul of US arms export policy aimed at expanding sales to allies, saying it would bolster the American defence industry and create jobs at home.
HMRC ADMITS “HUGE ERROR OF JUDGMENT” IN CITING POLITICAL DONATIONS IN REFUSAL TO RAID MONEY LAUNDERING SUSPECT
Buzz Feed on 25th April reported that HMRC made a “huge error of judgment” by citing political donations when it refused to help French authorities raid a money laundering suspect, Chancellor of the Exchequer Philip Hammond has admitted – and the government will conduct its own internal review into the matter. An HMRC official, rejected a request from investigators in France, made direct reference to the fact that the UK telecoms giant Lycamobile is “the biggest corporate donor to the Conservative party”.
2 SCOTS ARRESTED AMID INTERNATIONAL CYBERCRIME PROBE
2 men from Lanarkshire have been arrested after an international investigation into global cyber attacks. The arrests follow the closure of a website linked to more than 4 million cyber attacks including those targeting some of the UK’s biggest banks. Authorities in the Netherlands, Serbia, Croatia and Canada, with support from Police Scotland and Europol, targeted 6 members of the crime group behind webstresser.org. Dutch police seized servers and took down the website. Arrests were made in Croatia, Canada and Serbia and Scotland. NCA bosses say cyber criminals have used webstresser.org to launch more than 4 million distributed denial of service (DDOS) attacks.
FOUNDER OF CHINESE INVESTMENT FUND CONVICTED OF INSIDER TRADING IN PORTLAND TECH CASE
Portland Live in Oregon on 25th April reported Benjamin Chow, the founder of the Chinese-backed investment fund that tried in vain to buy Portland’s largest tech company, was convicted of insider trading. Chow helped start Canyon Bridge Capital Partners, a Chinese-funded firm that offered $1.3 billion to buy Portland-based Lattice Semiconductor in 2016, but Trump blocked the deal on security grounds.
FINANCIAL CRIMES ON THE RISE IN THE MIDDLE EAST
Gulf News in its 26th April edition reported that incidents of financial fraud surged last year with 34% of respondents reporting fraud/financial crime in PwC survey tracking trends frauds in economic crime. According to PwC’s the 2018 Middle East Economic Crime and Fraud Survey, asset misappropriation, business misconduct and fraud committed by consumers are the 3 most frequent types of fraud and/or economic crime reported by respondents. Internal Audit was the main contributor to detecting the most disruptive fraud experienced by respondents in the last 24 months, followed by internal tip-offs, fraud risk management and suspicious activity monitoring (14%).
STRUCTURAL ENGINEER IMITATORS FACE UP TO 257 YEARS IN JAIL
Construction Manager on 18th March reported that 2 men who posed as structural engineers are have been arrested by California police and charged with 487 counts related to the sale of fraudulent documents. Ruben Gutierrez and Wilfrido Rodriguez had previously worked for Palos Verdes Engineering, Rodriguez as an engineering drafter and Gutierrez as an architectural designer, but neither were licensed or trained architects or engineers, prosecutors said. Police are reported to have discovered more than 735 potential victims of the scam throughout 56 cities in southern California.
FAKE BOMB DETECTOR SELLER JAMES MCCORMICK JAILED AGAIN
The BBC on 25th April reported that A fraudster jailed for selling fake bomb detectors to war-torn countries has received 2 more years in prison for failing to pay back nearly £2 million. James McCormick made a fortune selling his detectors to Iraq and other countries. The 62-year-old businessman was ordered in 2016 to forfeit cash and assets worth nearly £8million. McCormick, who was due to be released from jail soon, received a default sentence of 842 days in prison after refusing to meet a £1.8 million shortfall following a hearing.
BRITAIN BITES BACK IN THE FIGHT AGAINST LOAN SHARKS
A news release from the HM Treasury on 25th April said that more funding was to be provided to tackle unlawful lending, and an increase in the amount of money seized from loan sharks to support those most vulnerable to their tactics. It says that, in England, since the Illegal Money Lending Team was established in England in 2004, they’ve made over 380 prosecutions, leading to 328 years’ worth of sentences, and have written off over £73 million of illegal debt, helping over 28,000 people to escape the jaws of the loan sharks. Similar teams operate in Scotland and Wales. The Police Service of Northern Ireland (PSNI) will get funding for a specialised officer who will lead on illegal lending within the Paramilitary Crime Task Force.
THE RISK TO UK PARENT COMPANIES FROM ENVIRONMENTAL CLAIMS BASED ON OVERSEAS ACTIVITIES
On 25th April, law firm Bryan Cave Leighton Paisner published a briefing saying that claimants are working hard to establish the ground rules for making environmental claims against UK parent companies for the activities of their overseas subsidiaries. UK-based companies with overseas environmental exposure, particularly in developing countries, should be monitoring developments in this area of law. It reflects on the February Court of Appeal case Okpabi and others v Royal Dutch Shell Plc (“RDS”) and Shell Petroleum Development Company of Nigeria Ltd. The briefing warns that what has been largely absent from commentary thus far is a warning to parent companies that, where they are allowed to proceed in the UK, claims of this nature are unlikely to be in any way straightforward or routine to defend. Where jurisdiction over a claim against a UK incorporated parent companies in connection with the activities of overseas subsidiaries is accepted, it says, claimants and claimant lawyers could hold a strong tactical hand. Parent companies in the UK should take the possibility of these claims seriously and act accordingly.
SWISS AUTHORITIES ALLOWED ISOPROPANOL EXPORTS TO SYRIA
Customs Today on 25th April reported that that 6 months after the Organization for the Prohibition of Chemical Weapons (OPCW) announced in May 2014 Syria had destroyed its stock of 120 metric tonnes of isopropanol, a Swiss company was able to export 5 metric tonnes of isopropanol to Syria without any opposition from the Swiss authorities. Isopropanol, more commonly known as rubbing alcohol, is found in disinfectants, cleaning agents, paints and varnishes, but it is also a major component of the type of gas used in recent suspected chemical attacks by the Assad regime. The company, SECO, is quoted as saying that the client was “a private Syrian pharmaceutical firm” and that there was “no indication that it had links to the Syrian regime at the time, nor today”, and “These products…did not need an authorisation in Switzerland at the time.
DEADLY AND DANGEROUS FAKE FOOD AND DRINK SEIZED IN GLOBAL OPERATION
On 25th April, Interpol and Europol reported that rotten meat, chemically coloured tuna and fake baby milk powder were just a small sampling of the products seized as part of the latest OPSON investigation into the presence of counterfeit and substandard food and beverage products on the market in Europe and beyond. Run over the course of 4 months (December 2017 – March 2018) across 67 countries, OPSON VII resulted in the total seizure of more than 3,620 tonnes and 9.7 million litres of either counterfeit or substandard food and beverages as a result of more than 41,000 checks carried out at shops, markets, airports, seaports and industrial estates. In total some 749 people were arrested or detained with investigations continuing in many countries.
CHINESE CUSTOMS TAKE TOUGH MEASURES AGAINST IP INFRINGEMENT
Xinhua on 24th April reported that Chinese customs took tough measures against intellectual property rights infringement last year, official data showed. Customs authorities seized more than 19,000 shipments of goods suspected of IPR infringement in 2017, involving nearly 41 million individual items, according to the General Administration of Customs (GAC). Over 98% of the goods were involved in trademark infringement. The value of those involved in patent infringement rose 41.2% year on year. Most of the seized goods were transported by sea, and through customs offices in eastern coastal regions.
RUSSIAN OFFICIALS FUNNELLED BILLIONS INTO OFFSHORE
Crime Russia on 25th April reported that Rosfinmonitoring (the Federal Financial Monitoring Service) analysed the data of the Panama Papers and the Paradise Papers and discovered thousands of offshore companies through which the Russians laundered billions of roubles. Materials on deputies and governors were handed over to law enforcers.
INDIA TO OFFER DATED, REFURBISHED MILITARY MATERIEL TO ‘FRIENDLY’ COUNTRIES
On 25th April, Janes.com reported that India’s MoD has recently called upon the armed forces to draw up a list of outdated equipment that can be refurbished and gifted to ‘friendly’ countries in an effort to deepen regional defence ties. The list is expected to include artillery field guns, armoured vehicles, helicopters, naval patrol vessels, and radar systems that are dated or nearing obsolescence. India’s practice of gifting second-hand defence weapons and platforms is not new, with several countries such as Afghanistan and Myanmar receiving such equipment in recent years.
RECORD 9 TONNE HAUL OF COCAINE IN ALGECIRAS
On 25th April, the Gibraltar Chronicle reported Spanish authorities have seized 9 tonnes of cocaine stashed inside a container of bananas in the port of Algeciras, the largest haul of the drug ever detected in a European port. The drugs were hidden between 1,080 boxes of bananas shipped from the port of Turbo in Colombia.
POLICE IN CHINESE CITY SEIZE 600 COMPUTERS USED TO MINE BITCOIN
KYC 360 reported on 25th April that Police in the north China city of Tianjin confiscated 600 computers used to mine bitcoin cryptocurrency after the local power grid operator reported abnormal electricity usage, Xinhua reported. China was home to the majority of cryptocurrency mining operations before Beijing last year began to discourage it as part of a larger crackdown on bitcoin and other cryptocurrencies. It is unclear how much of mining activity has moved offshore or been shut down.