26th April 2018
AMENDMENTS AFFECTING BENEFICIAL OWNERSHIP RULES FOR IRISH COMPANIES AND TRUSTS AGREED BY EUROPEAN PARLIAMENT
Irish law firm, A & L Goodbody, produced an article on 25th April saying that the European Parliament has adopted a number of amendments to the proposed 5th AML Directive (5AMLD), which in turn will amend the 4th AML Directive (4AMLD) in relation to the beneficial ownership of companies and trusts. It says that key changes which, if adopted, will affect the beneficial ownership rules currently applying to companies incorporated in Ireland (and other Member States), when transposed in due course into Irish law, include – any member of the general public is also to have access to the information on the central register of beneficial ownership; Member States are permitted to impose restrictions on access in certain circumstances; the beneficial ownership information is to be made available for at least 5 years, and for a maximum of 10 years after a set date; sanctions for breach of the beneficial ownership obligations may be increased; There are no changes proposed to the limited exceptions in 4 AMLD in relation to listed companies etc. See the article for more detail.
AML: WILL NEW EU REGIME IMPACT THE UK?
In its Brexit Blog, law firm Kingsley Napley asks this question on 23rd April. It says that matters are complicated for the UK – will the 5th ML Directive be adopted before the UK exits the EU and what are the consequences for the UK if it does not? It points out that it is anticipated that there will be an 18-month period in which to implement the new Directive, taking us to the end of 2019, well past 29th March 2019 which is “Brexit-Day”. A House of Commons Scrutiny Committee has said that it likely that most, if not all, of the new Directive will have to be transposed in the UK as a matter of law due to the transition arrangements for Brexit. It points out that UK will remain a member of FATF. As a result of the UK’s membership of FATF it will continue to be involved in setting the standards upon which the EU legislation is based. It also points out that in the UK Anti-Corruption Plan 2017-22, further enhancing AML/CFT capability alongside stronger law enforcement, prosecutorial and criminal justice action, are set out as core actions to “strengthen the integrity of the UK as an international financial centre” and tackle illicit financing. To do so, the article suggests, the simplest way to do this is to adopt the new Directive in its entirety whether that falls before or after Brexit-day.
ISLE OF MAN SANCTIONS LAW AMENDMENTS
On 25th April, the Isle of Man issued news releases advising that –
- the European Union (Central African Republic Sanctions) (Amendment) Order 2018 came into operation on 24th April, alongside the Central African Republic Sanctions (Amendment) Regulation 2018. They apply and implement EU Regulation 2018/387/EU and UN SCR 2399 in the Island. They provide for certain amendments to the exemptions to the arms embargo, as well as to the designation criteria relating to persons and entities subject to restrictive measures; and
- the European Union (Democratic Republic of the Congo Sanctions) Order 2018 and Democratic Republic of the Congo (Sanctions) Regulations 2018 came into operation on 24th They apply and implement in Island law EU Regulation 1183/2005/EC imposing certain specific measures directed against person acting in violation of the arms embargo with regard to DRC, as substantively amended by a number of subsequent instruments.
US DEPARTMENT OF STATE CONCLUDES $30 MILLION SETTLEMENT OF ALLEGED EXPORT VIOLATIONS BY FLIR SYSTEMS INC
The Imperial Valley News on 25th April reported that the US Department of State and FLIR have reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the Department’s Bureau of Political-Military Affairs. The case relates to alleged unauthorised exports of defence articles, including technical data; the unauthorised provision of defence services; violation of the terms of provisos or other limitations of licence authorisations; and the failure to maintain specific records involving ITAR-controlled transactions. FLIR’s alleged unauthorised exports also included the retransfer of ITAR-controlled technical data and provision of defence services to dual national employees of Iran, Iraq, Lebanon, and Cuba to which the US restricts exports of defence articles and defence services.
NEW JERSEY WOMAN CHARGED WITH SCHEME TO SMUGGLE $2 MILLION IN AIRCRAFT PARTS TO IRAN
NJ.com reported on 25th April that Joyce Eliabachus faces charges of conspiracy to violate Iranian transactions and sanctions regulations, conspiracy to commit money laundering and conspiracy to smuggle goods from the US. She served as principal officer and operator of Edsun Equipments LLC, an aviation parts trading business Eliabachus ran from her home, according to a criminal complaint. She is accused of working in a “sophisticated” network that covertly moved large amounts of plane components from US companies to Iran through freight-forwarding businesses in UAE and Turkey. The scheme involved at least 49 shipments of approximately 25,500 aircraft parts, May-October 2015. Some of the parts are said to have gone to an airline which provides various support to Iran’s powerful Islamic Revolutionary Guard Corps.
MALTA JUDGE DECIDES AGAINST DEFLAGGING FISHING VESSELS AMID OIL SMUGGLING INVESTIGATIONS
The Times of Malta on 25th April carried a report saying that a court has upheld a request by a fishing company to block the striking-off of five vessels, part-owned by ex-footballer Darren Debono, from the Maltese shipping register. The company insists its boats were only used for fishing. The vseels were held pending ongoing proceedings over his alleged involvement in an oil-smuggling racket from Libya to Italy.
CHINA IMPOSES RESTRICTIONS ON EXPORT OF SCIENTIFIC DATA
On 26th April, an article from Wilmer Hale advised that China has issued a new regulation which imposes potentially severe restrictions on the export of scientific data while at the same time calling for wider access to such data within the country. The new order had effect from 17th March. It is said that the measures apply to the collection, creation, processing and sorting out, openness and sharing, and management and use of “Scientific Data” that is funded through a government budget, and under specified circumstances may also apply to Scientific Data activity by any entity or individual inside China that is not funded by the government.
CARGO THIEVES GET MORE SOPHISTICATED BY GOING BACK TO THE BASICS
Holland & Knight on 25th April published an article about thieves break into freight containers. As well as simply breaking in, but a professional thief will want to conceal as much as possible about when, where, and how the theft occurred. The cargo seal thus becomes a necessary target, because it is the easiest way for a shipper to identify when and where his cargo has been tampered with. The article says that a few highly-skilled career criminals can separate the traditional cargo seal and re-install it with a soldering gun – but now, even unskilled thieves have begun to use 3D printing to replicate seals, so hiding when (or even if) a theft had taken place. The article warns though that not all theft is so technology driven: it’s a good old-fashioned hack with drills and hammers, and rather than bother with trying to re-create or duplicate the seal once it’s broken, thieves are simply taking the door off its hinges or removing the handle with the seal intact. Security experts now openly acknowledge how easy it is for a thief to open a trailer or ocean container without breaking the seal. All it takes is a drill, some rivets, and a little paint. The article suggests some preventative measures that a shipper can take to help discourage thieves. It says dock personnel should be instructed to look carefully at seals and doors before opening the trailer or container. The article concludes that, at the end of the day, a reliable carrier with a good security programme may be one of the best protections.
US TREASURY LIFTS SANCTIONS ON COLOMBIAN PROFESSIONAL SOCCER TEAM AFTER TIES SEVERED TO DESIGNATED CRIME GROUP
The US Treasury advised on 26th April that Colombian professional soccer team, Envigado Futbol Club S.A. (also known as Envigado F.C.) had been removed from its SDN list. It had been added on November 19th 2014, pursuant to the Foreign Narcotics Kingpin Designation Act, because it was owned, controlled, or directed by, or acting for or on behalf of, La Oficina de Envigado and Juan Pablo Upegui Gallego. However, the club recently completed a sale and restructuring of team management under the oversight of the Colombian government that eliminated ties to a Colombian crime group involved in international narcotics trafficking and other criminal activities and cut them off from any benefit from the sale.
ISLE OF MAN SHIPPING LAW
DQ Advocates in the Isle of Man on 25th April announced that it had contributed the chapter on Isle of Man shipping law to the International Comparative Legal Guide, covering areas such as marine casualty law including pollution, cargo claims, passenger claims, vessel arrest and security against a maritime claim, recognition and enforcement of foreign judgments and awards. It also mentions that the Ship Registry has been certificated to the new ISO standard – ISO 9001:2015.
INTERNATIONAL CONFERENCE ON COMBATING THE FINANCING OF DAESH AND AL-QAEDA
On 26th April, the French Government issued a statement at the conclusion of an international conference involving FATF, of FATF-Style Regional Bodies (FSRB, such as Moneyval), the G20 and the Global Coalition against Daesh. They met to discuss the ways and means to strengthen the efficiency of our action against terrorism financing and the experience developed during our common fight to defeat Islamic State in Iraq and the Levant (ISIL/Daesh) in Syria and Iraq. The conference proposes –
- Further reinforcing the domestic legal and operational frameworks to collect, analyse and share information by national authorities;
- Fighting anonymous financial transactions;
- Enhancing the traceability and transparency of non-profit organisations (NPO) and charitable funds;
- Anticipating and addressing the risk of new financial instruments being abused;
- Partnering with the private sector, especially the tech industry, in the fight against terrorist financing;
- Reiterating the usefulness of international and national asset freezing and seizure mechanisms;
- Bolstering the effectiveness of international co-operation;
- Support the authority, visibility and resources of the FATF and FSRB;
- Strengthening the collective engagement vis-à-vis States that fall short of standards or that lack capacity; and
- Maintaining a common mobilization against terrorist financing.
BELGIUM CONSULTATION ON AML/CFT REGULATION
Payments Compliance reports that on 25th April the Financial Services and Markets Authority (FSMA) in Belgium launched a consultation on a new draft regulation on AML/CFT.
NIGERIA CENTRAL BANK NEW AML ADMINISTRATIVE SANCTIONS REGIME
On 26th April, Vanguard in Nigeria reported that the Central Bank of Nigeria (CBN) had rolled out a new regime providing for fines for banks, directors and other key officials for 48 types of money laundering breaches. The previous regime only allowed for fines on financial institutions. The move also should ensure Nigeria’s compliance with FATF Recommendation 35.
PILATUS – MALTESE GOVERNMENT PUBLISHES FULL TRANSLATED TEXT OF EFIMOVA COURT CASE IN GREECE
The Malta Independent on 26th April reported that the Maltese government has published “the full text of the Greek court decision regarding Marioa Efimova,” the Pilatus Bank whistleblower, and has provided links to the texts.
LATVIAN PARLIAMENT PASSES BILL OBLIGING BANKS TO GET RID OF HIGH-RISK CLIENTS
Xinhua on 26th April reported that Latvia has passed amendments to its AML law, banning Latvian-registered banks from doing business with so-called shell companies. The amendments to the law on the prevention of money laundering and terrorism financing were passed in a fast-track procedure. 57 parliament members voted for the initiative, while 17 voted against it and 4 abstained.
HE HAD $22 MILLION IN CASH HIDDEN IN BUCKETS. NOW, HE’S OFF TO PRISON FOR 5 YEARS
The Miami Herald on 25th April carried a story saying that Luis Hernandez-Gonzalez ran a Miami indoor gardening supply store favoured by marijuana growers from across the nation — some legal, some not. They bought light bulbs, fans and fertilisers with names such as “Bud Candy” and “Big Bud”. His business was so lucrative that he had to stash $22 million in buckets hidden above a closet in his home.
WORLD COUNCIL OF CREDIT UNIONS URGES INCREASED PRIVATE SECTOR INPUT DURING AML EVALUATIONS TO REDUCE REGULATORY BURDEN
CU Insight on 25th April reported that the World Council of Credit Unions has urged FATF to increase engagement with the private sector during evaluations of national AML/CFT regulations. It also urged FATF to continue its efforts to reduce “de-risking” in the financial system, which although less prevalent for credit unions and other financial co-operatives in recent years due to clearer FATF guidance, credit unions in some jurisdictions continue to face obstacles when trying to establish correspondent bank accounts or clear checks, especially in parts of the Caribbean.
MULTIPLE FRAUD CASE IN FRANCE – ACTION DAY LAUNCHED SIMULTANEOUSLY IN 16 EUROPEAN STATES BY A FRENCH INVESTIGATIVE JUDGE
A news release from Eurojust on 26th April reported that on 11th April, the large-scale ‘Carton Rouge’ operation was initiated by a French Investigative Judge in co-operation with the French Desk at Eurojust, leading to the arrest of 9 suspects in Paris and Marseille, the freezing of numerous bank accounts, as well as the blocking of internet sites throughout Europe. The organised crime group behind this far-reaching swindling case is suspected of having committed the crimes of fraud, bank fraud, embezzlement, money laundering and participation in a criminal organisation. The case involved execution of European Investigation Orders, and effectively responded to urgent requests for mutual legal assistance. In August to November 2017, the members of the group had impersonated football agents who contacted 15 different French football clubs, claiming that certain football players’ bank accounts had changed and, therefore, the footballers’ salaries needed to be transferred to their allegedly new bank accounts. This fraudulently acquired capital was then further wired from those temporary accounts to accounts in Bulgaria and Malta for money laundering purposes. In the course of the investigation, the French national authorities discovered a parallel swindle performed by the same perpetrators, involving a fake diamonds scheme. A similar fraud case, performed by the same criminal group, using bitcoins instead of diamonds, was also revealed to the investigating authorities. The proceeds of yielded by all 3 illegal activities amount to an estimated total of €2 million, to the detriment of approximately 50 victims.
REGIONAL TAXES IN SPAIN ON LARGE RETAIL ESTABLISHMENTS ARE COMPATIBLE WITH EU LAW
A news release on 26th April advised that judgments in a series of cases before the CJEU conclude that the purpose of the taxes is to contribute to environmental protection and to town and country planning by attempting to correct and counterbalance the adverse effects of large retail establishments. Hence, these taxes (sometimes called “Tesco taxes” in the UK) are compatible with EU law. The Court rules that neither freedom of establishment nor the law on State aid preclude taxes on large retail establishments such as those at issue.
SWISS AUTHENTICATION COMPANY SICPA FACES CORRUPTION PROBE IN BRAZIL
M Lex on 26th April reported that Sicpa, a Swiss company operating in the authentication of banknotes and traceability markets, is the target of an anti-corruption probe in Brazil, MLex has learned. In addition to the administrative investigation, a former executive vice president is being tried on criminal charges in the country. Both cases involve the alleged payment of millions of dollars in bribes to secure a contract with the Brazilian Mint.
DISGRACED ROMANIAN BUSINESSMAN HIT WITH FRESH 10-YEAR SENTENCE FOR €12 MILLION FRAUD
Business Review on 26th April reported that disgraced Romanian businessman Sorin Ovidiu Vintu, currently serving a prison sentence, received a new 10-year sentence for defrauding the Association of Employees of SNP Petrom.
HEAD OF KYRGYZSTAN’S CORRUPTION AGENCY FIRED AFTER 10 DAYS IN JOB
Eurasianet reported on 26th April that Bolot Suyumbayev, former deputy head of the State Committee for National Security, or GKNB, the successor agency to the KGB, formerly a security guard (and one-time movie stuntman) for ex-President Almazbek Atambayev, whose term ended in November, was fired from that post on 7th April. However, on April 16th, Prime Minister Sapar Isakov (another Atambayev ally who has since been fired) appointed him to the anti-corruption role, but he has now been sacked from the new post.
UK EXPORT OF OBJECTS OF CULTURAL INTEREST REPORT 2016/17
On 26th April, the Department for International Trade published the 63rd annual report on the Export of Objects of Cultural Interest by the Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest. It reports that between 1st May 2016 and 30th April 2017, 22 cases were considered by the Reviewing Committee. 15 were deferred by the Secretary of State for Digital, Culture, Media and Sport following the recommendation of the Committee. The export deferred items included the painting by Bernardo Bellotto The Fortress of Königstein from the North; an English tapestry made in the Indian Manner by 17th Century London weaver Michael Mazarind; a Wedgwood First Day’s Vase; and vase designed for Cardiff Castle by the noted architect and designer William Burges. 4 items were bought by public institutions.
EUROPEAN COURT OF JUSTICE RULES IN TRUCK DRIVER’S FAVOUR IN CASE AGAINST REVENUE COMMISSIONERS
The Irish Examiner on 26th April reported that the ECJ has ruled in favour of a truck driver in his challenge against a tax penalty demand for €1.5 million from Greece concerning a demand that was served on him by Revenue over 10 years after his arrest, conviction and subsequent acquittal of smuggling cigarettes in Greece. The driver claimed the Greek Authorities have not complied with the provisions of the relevant EU Directive before requesting the assistance of Revenue, and he was never properly notified of the demand nor was he given an opportunity to contest it, which is a breach of his rights. He also was informed the demand was a penalty in respect of a criminal offence that he was acquitted of.
CHARTERED INSTITUTE OF TAXATION PROPOSES IMPROVEMENTS TO SCRUTINY OF UK TAX LEGISLATION
On 26th April, the CIOT submitted a number of proposals for improving parliamentary scrutiny of the Finance Bill and other tax legislation.
CHINESE AUTHORITIES BUST MAJOR ONLINE CASINO GAMBLING RING
Calvin Ayre on 26th April reported that Chinese authorities have broken up a major illegal online gambling ring, arresting over 100 suspects in 2 major operations, froze bank accounts containing $13.4m in funds and seized property.
LATEST AML OVERHAUL WON’T HARMONISE EU RULES, EUROPEAN BANKING AUTHORITY WARNS
Law 360 on 26th April reported that the director of the EBA urged Parliament to rethink how they draft new laws aimed at cracking down on money laundering and terrorist financing, warning that the current approach doesn’t go far enough to ensure the regulation will be implemented harmoniously across the bloc.
SPAIN: HOW A CRIME GROUP SMUGGLED MIGRANTS AND CANNABIS ON JET SKIS
Europol on 26th April published a news release that said an organised crime group from Morocco used jet skis to smuggle migrants and cannabis across the Mediterranean Sea to Spain. n total, 19 people of Moroccan origin were detained in Spain.Police officers carried out 7 houses searches in Almeria, Spain, where they seized 11.6 kg of drugs and over €15 000 in cash. 21 devices were examined and 16 gigabytes of data submitted to the Spanish law enforcement agencies by Europol. The organised crime group was made up of Moroccan citizens who were residing in various EU countries, mainly France, Italy and Spain. They contacted and sheltered migrants who had been smuggled with falsified documents from the Spanish autonomous city of Ceuta, located on the north coast of Africa, to mainland Spain, crossing the Strait of Gibraltar.
IRELAND: CABINET APPROVES MINISTER’S PROPOSED LEGISLATION TO IMPLEMENT 4TH ML DIRECTIVE
Baker McKenzie on 26th April reported that the Minister for Justice and Equality has received Cabinet approval for the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018. The Bill transposes most of the provisions of the 4th EU Money Laundering Directive and implements the most recent recommendations of FATF.
MAYOR OF ODESSA ACCUSED OF MEMBERSHIP OF CRIMINAL GANG
On 26th April, Baker McKenzie reported that, according to the BBC, the mayor of Odessa, Gennadiy Trukhanov, is said to have been a member of a criminal gang from Odessa and to have owned significant shares in 4 foreign companies in British tax havens. Trukhanov is alleged to have been member of a criminal group that earned money from the oil industry. In the 1990s, during the collapse of the USSR, members of the group based in Italy are alleged to been involved in smuggling drugs and weapons.
THE BRITISH HACKER WHO BECAME THE ISLAMIC STATE’S CHIEF TERROR CYBERCOACH
In its April 2018 edition, the Combating Terrorism Center at west Point’s CTC Sentinel included an article providing a profile of Junaid Hussain. Until his death in a US drone strike in August 2015, Junaid Hussain was the Islamic State’s most prolific English-language social media propagandist, working to incite and guide sympathizers in the UK, US, and beyond to launch terrorist attacks. Before joining the jihad in Syria, Hussain was part of a hacking collective in the UK, focusing much of his attention on perceived injustices against Muslims. In many respects, he was well integrated into British society with his family home in a leafy suburb of Birmingham.