18th May 2018
MINEFIELDS IN THE US EXPORT CONTROL SYSTEM
On 14th May, King & Wood Mallesons published the first in what is intended as a series of articles on key issues in the US export control system, the first of which seeks to review the “minefields” in US export control frequently encountered by enterprises in China. The article uses several case studies, and includes export controls applied to activities beyond the actual export, the Transmission and Release of Controlled Items to Foreign Persons within the US, the fact that export control can apply to non-listed items, and assistance from non-US Entity on transaction applies for US export control and sanction management. It also suggests ways to avoid the “minefield” – a comprehensive export control clearance programme, voluntary disclosure, and the Authorized Validated End User (VEU) programme operated by BIS in the US and under which authorised entities are permitted to accept certain controlled items from US by means of export, re-export and transfer without a licence.
SOUTH KOREAN BANKS ON ALERT OVER US REGULATOR’S INSPECTION
Business Korea on 18th May reported that South Korean banks are on alert as the New York State Department of Financial Services (DFS) is planning to start an inspection into their branches in New York in July. The banks could be subject to punitive and remedial actions if any case of incompliance with state and federal AML regulations is found. In the past, NongHyup Bank was ordered to pay $11 million in penalties for negligence of AML compliance by its New York branch.
TEXAS DOCTOR BOUGHT JET AND MASERATI WITH MONEY FROM UNNECESSARY CHEMO TREATMENTS
NDTV on 18th May carried the story of a Texas doctor, Jorge Zamora-Quezada, who the DoJ alleges bankrolled his “lavish” lifestyle by performing unnecessary procedures and prescribing costly medication to, potentially, thousands of patients. Investigators have said that he and co-conspirators took part in a $240 million health-care fraud scheme and international money-laundering operation funded by excessive and unwarranted medical procedures – including treatment for children and the elderly.
FORMER EL SALVADOR PRESIDENT TO STAND TRIAL FOR MONEY LAUNDERING
Insight Crime on 17th May reported that a former president in El Salvador is set to stand trial for allegedly embezzling hundreds of millions of dollars from the state to personal accounts, which could lead to him becoming the first former president of the Central American nation to face a criminal conviction and prison on such charges. Elías Antonio Saca, who was president of El Salvador from 2004 to 2009, and 6 other members of his administration, will stand trial for allegedly embezzling $300 million. Saca and his associates were arrested in October 2016.
SWISS INVESTIGATING MONEY LAUNDERING LINKED TO ANGOLAN FUNDS
Swissinfo reported on 17th May that the Office of the Attorney General of Switzerland (OAG) has authorised several searches in the country over possible money-laundering affecting the Angolan Sovereign Wealth Fund and the Angolan National Bank. The Attorney General has opened criminal proceedings against unknown persons on suspicion of money laundering.
REALLY DIRTY MONEY LAUNDERED THROUGH BOOKMAKERS IN MANCHESTER
The I Hate Money laundering blog on 18th May posted a story about a gang in Manchester which carried out robberies of cash delivery vans. As the cash had been dye-stained by security devices during the course of the robberies, the gang had to use machines rather than people and so they visited nearly 50 betting shops, depositing the cash in fixed-odds betting (FOBT) machines and generating credit slips which they then exchanged for clean banknotes. It worked for a while, but one day a cashier in a betting shop did not have enough cash to pay out against the credit slip and suggested that the player (aka robber) open an online account. The player/robber started filling in an application form but then thought better of it – and left the part-completed form behind with his fingerprints and a phone number on it… The ringleader was jailed for 12 years for robbery and money laundering, and 16 other men received sentences totalling 112 years.
SHARP INCREASE IN REPORTED WHITE-COLLAR CRIME IN SINGAPORE
Nikkei Asian Review on 18th May reported that a global survey conducted by PwC every 2 years showed that over a third of Singapore businesses said they were hit by fraud in the last 2 years as threats increased and detection methods improved. The increase echoes the global trend, the survey found. The economic crime and fraud survey examined over 7,200 respondents from 123 territories, of which 118 were from Singapore. However, while instances of bribery and corruption in Singapore were lower than the global average, incidents related to money laundering were higher.
EU SET TO REMOVE BAHAMAS, ST KITTS FROM TAX HAVEN BLACKLIST
Reuters on 18th May reported that EU finance ministers are set to remove the Bahamas and Saint Kitts and Nevis from an EU list of tax havens, EU documents show. The islands had been included in the blacklist in March as their tax rules and practices were deemed not in line with EU standards.
FRENCH CYBERCRIME GANG BOSS CAUGHT IN THAILAND
On 18th May, the Bangkok Post reported that a French cybercrime gang leader, Jonathan Verron, 25, wanted for hacking into customers’ accounts at a bank in England and demanding a ransom has been caught. He allegedly hacked into the financial details of customers at a bank in the UK and demanded a ransom from the bank in exchange for not disclosing the information. He is one of 3 suspects, the others having already been caught.
GREATER NATIONAL SECURITY SCRUTINY AT THE HEART OF NEW UK MERGER CONTROL REFORMS
Berwin Cave Leighton Paisner on 18th May published an article saying that the UK has enacted legislative changes which lower the merger control thresholds under the Enterprise Act 2002, and extends the jurisdiction of Competition and Markets Authority and Secretary of State to investigate mergers in certain sensitive areas of the UK economy where there may be national security implications. The changes take effect from 11th June.
IRISH MEN ARRESTED AFTER €3.4 MILLION CANNABIS SEIZURE IN SPAIN
Customs Today on 18th May reported that 5 men, including 4 from Ireland, have been arrested after €3.4 million worth of cannabis herb was seized in Spain. The drugs were discovered north-west of Malaga among pallets of lettuce in a truck that was destined for Ireland.
ITALY: NIGERIAN BLACK AXE NEW FOE FOR POLICE
On 18th May, OCCRP reported that Sicilian authorities that have been fighting the Cosa Nostra for decades are facing a new type of organised crime: a Nigerian sex and drug trafficking gang called Black Axe. After the Cosa Nostra in Palermo had been weakened by police, the Black Axe swooped in.
OPCW CONCLUDES CHEMICAL WEAPONS ‘LIKELY USED’ IN SYRIA
Jurist on 18th May reported that the Organisation for the Prohibition of Chemical Weapons has concluded that chemical weapons were “likely used” during the February attacks in Syria. According to the report, the OPCW found chlorine gas in 2 cylinders and in the environment. The findings were also supported by eyewitness testimony and the symptoms from those in the affected area following the attack.
PODCAST: WEIGHING RED FLAGS
In the latest TRACE podcast, Carolyn Lindsey and Alexandra discuss a series of “red flags” relating to a problematic fictional agent, Tan, and the relevance of each.
US FEDERAL RESERVE TERMINATES BARCLAYS 2010 ENFORCEMENT ACTION OVER SANCTIONS VIOLATIONS
On 18th May, KYC 360 reported that the US Federal Reserve has terminated an enforcement action against Barclays Bank which was established around 8 years ago when the bank agreed to pay almost $300 million to settle charges related to sanctions – reportedly because Barclays has satisfied the requirements of the enforcement action. As part of the deal signed in August 2010, Barclays agreed to pay almost $298 million to settle charges of facilitating transactions in violation of US sanctions. It also agreed to submit a compliance programme, which included an annual assessment of OFAC compliance risks arising from Barclays activities and customer base.
18 ACQUITTED IN MASSIVE BRUSSELS AIRPORT 2013 DIAMOND HEIST
KYC 360 reported on 18th May that 5 years after a brazen multimillion-dollar diamond heist on the tarmac of Brussels Airport, a Belgian court has cited a lack of evidence as it acquitted 18 suspects in the case. The theft saw tens of millions worth of gems were stolen from the hold of a departing Swiss-bound plane. One other person, suspected of being the mastermind, will hear his case in court later.
ARE US RECORDS RETENTION REQUIREMENTS ON A COLLISION COURSE WITH THE GDPR’S ‘RIGHT TO ERASURE?’
On 18th May, Legal Tech published an article saying that US laws require companies to retain records for years, and sometimes forever, and violating US records retention laws can result in domestic fines and penalties. But this could be an issue with the upcoming GDPR.
THIRD COUNTRIES ALIGN WITH EU SANCTIONS ON NORTH KOREA, IRAN, DRC
On 18th May, the EU announced that Macedonia, Montenegro, Albania, Bosnia and Herzegovina, Iceland, Liechtenstein and Norway and Moldova had declared that they would align themselves with EU sanctions regimes on North Korea, Iran and the Democratic Republic of the Congo.
LUXEMBOURG SEEKS MALAYSIA TALKS OVER FROZEN 1MDB CASH
Reuters on 18th May reported that authorities in Luxembourg hope Malaysia’s new government may offer new information on some $100 million from investment fund 1MDB that Luxembourg froze 2 years ago in a money-laundering probe – confirming for the first time that such a sum had been blocked in the Grand Duchy after Swiss private bank Edmond de Rothschild was fined 1 year ago over money-laundering.
GLENCORE MAY BE SUBJECT TO FRESH SFO PROBE
Master Investor and others reported on 18th May that rumours have circulated that investigators are seeking formal approval to look at bribery allegations involving the mining giant, the Democratic Republic of Congo, and Israeli billionaire Dan Gertler.
UKRAINIAN PEOPLE SMUGGLERS WHO BROUGHT IN 17 ON A YACHT ARE SENTENCED
On 18th May, an NCA news release reported that 3 Ukrainian nationals who were convicted of attempting to smuggle 19 migrants into Suffolk on a hired yacht have been jailed. The trio were arrested after the boat – Flamingo – arrived into Southwold harbour on 15th October, having sailed across the North Sea from the Netherlands.