23rd May 2018
ZTE ESTIMATES AT LEAST $3 BILLION IN LOSSES FROM US BAN
Bloomberg on 23rd May reported that Chinese telecom company ZTE s estimating losses of at least $3.1 billion from a US technology ban that’s halted major operations as clients pull out of deals and expenses mount, people familiar with the matter said. However, it is said to be hopeful of striking a deal soon and already has a plan in place to swing idled factories into action within hours once Washington agrees to lift its 7-year moratorium on purchases of American chips and components.
FINANCE DIRECTOR CONVICTED OF MONEY LAUNDERING IN NEW ZEALAND
On 10th May, the New Zealand Herald reported that a banned director of a finance firm has also been convicted on money laundering charges, just weeks after losing a legal battle challenging a $5.3 million fine for his “calculated and contemptuous disregard” for anti-money-laundering laws. Xiaolan Xiao, 60, the Ping An Finance director and sole shareholder, has pleaded guilty to and been convicted of a money-laundering charge.
GRENADA – IMF STATEMENT FOLLOWING INSPECTION
On 22nd May, following an Article IV Mission inspection of Grenada, the IMF and the government issued an agreed joint statement that included the comment that “ensuring compliance with AML/CFT regulations at all levels is critical for Grenada’s continued stable access to cross-border payments. While banks in Grenada have not had a meaningful loss of correspondent banking relationships (CBRs), there are risks that non-bank financial institutions may lose access to bank payments systems due to AML/CFT concerns. A proposed legislation to formalize the annual registration of entities for AML/CFT purposes will be helpful in capturing risks early”.
US ATTORNEY WHO RELOCATED TO COSTA RICA INDICTED ON FEDERAL FRAUD AND MONEY LAUNDERING CHARGES
The Costra Rica Star on 21st May reported that Philip James Layfield, 44, a personal injury attorney and certificated public accountant (CPA), has been indicted on federal charges accused of stealing the majority of a multi-million dollar settlement, most of which should have been paid to the victim of a car accident. He was arrested in New Jersey in late April, when he returned to the US from Costa Rica, where he relocated when his law firm Layfield & Barrett located in Los Angeles faced declining revenues and he chose to close it. The article reports that the indictment specifically alleges that Layfield entered into an agreement to represent an individual who was struck by an automobile in Orange County in 2016 and suffered significant injuries. After negotiating a $3.9 million settlement related to the accident, Layfield allegedly misappropriated most of money due to the victim – approximately $2 million.
FORMER SPANISH MINISTER ARRESTED FOR ALLEGED MONEY LAUNDERING
On 23rd May, the Latin American Herald Tribune reported that a former Spanish minister who had served as president of the Valencia region, as well as the ruling Popular Party’s spokesperson in the lower house of parliament, has been arrested for suspected money laundering, embezzlement and diversion of funds. It is sais that Eduardo Zaplana’s arrest was part of an ongoing probe launched by the anti-corruption prosecutor’s office in which at least 5 others have also been detained. The reports says that also arrested was businessman Vicente Cotino, whose uncle Juan Cotino was a former Valencia regional president and ex-director of the national police.
PARAGUAY SUSPENDS ARMS IMPORTS IN BID TO STOP ILLEGAL TRAFFICKING TO BRAZIL
On 23rd May, the Macau News Agency carried a Reuters report saying that Paraguay has issued an open-ended suspension of arms and ammunition imports in a bid to fight illegal trafficking across the border into neighbouring Brazil. The move followed pressure from the US, which imposed a 3-month moratorium on arms sales to Paraguay as part of a concerted effort with the Brazilian government to clamp down on arms smuggling, according to a person familiar with the matter. Studies by police in Brazil suggest many of the heavy rifles used by criminal gangs there were made in the US and smuggled into the country via Paraguay.
HOW FENTANYL COULD ALTER GLOBAL DRUG POLICY
On 22nd May, the Washington Post published a compelling article which begins by saying that policymakers and the public are acutely aware that the powerful opioid fentanyl has significantly worsened the opioid epidemic in the US and accounting for almost 20,000 deaths in 2016. But few people appreciate fentanyl’s potential to permanently alter illegal drug markets and international relations along with them. Whereas heroin, morphine, oxycodone, hydrocodone and virtually every other opioid traded on the black market depend on a plant – the opium poppy – for their raw material, fentanyl is an opioid analogue that can be created from chemicals in a laboratory. A small gang with a single talented chemist can thus economically undercut poppy-based opioid production. Hence, even if agriculturally based producers (such as found in Afghanistan and South America) shift some of their opioid business to fentanyl, as have a few Mexican cartels, they find themselves in a weaker position because they no longer gain the political capital they once did from providing plentiful drug-production jobs to local residents. Smuggling is also said to be affected, as Fentanyl is so much more potent and so compact that people with no particular smuggling expertise can ship it overseas in a regular-size piece of mail with little chance of it being detected. Fentanyl producers can also simply set up small labs within consuming countries and thus avoid the smuggling altogether. The article concludes by saying that the impact of synthetic opioids has yet to be fully unravelled, but it clearly will go beyond public health to the basic nature of drug trafficking itself.
TRAMADOL BECOMES NEW DOPE FOR HUNDREDS OF LIBERIAN YOUTH
On 22nd May, Front Page Africa reported that substance abusers in Liberia are now switching from cocaine, Italian white, Marijuana and other narcotics to overdose of a medical prescription, Tramadol, posing a serious social problem in the country. Tramadol is the generic name for a prescription pain reliever sold under the brand names Ultram, Conzip, Rybix ODT, and Ultram ER. It is widely considered safe and has been approved by the US FDA.
CAN NEW LEADERS REVIVE WEST AFRICA’S FIGHT AGAINST ORGANISED CRIME?
On 22nd May, the Daily Maverick republished an ENACT Africa article which says that West Africa is often portrayed as a continental hotbed for organised crime and that criminal groups fuel insecurity and violence, thriving in countries where governance systems are weak. West Africa is known for various forms of illicit trafficking – from drugs, weapons and humans to stolen cars, cigarettes, counterfeit medicines, cultural artefacts and wildlife products. Natural resources like gold, diamonds and oil are smuggled or illegally traded, as are cash crops like cocoa and cashew nuts, and various consumer goods. Other transnational organised crimes are also rife and rising, including money laundering, cattle rustling, cybercrime and illegal activities at sea. However, the article says that the Economic Community of West African States (Ecowas) is poised to significantly boost its role as a regional framework for policy development and action on these issues. Ecowas also has in place several political, legal and operational instruments against specific forms of organised crime: the Protocol on the Fight against Corruption (2001); the Convention on Small Arms and Light Weapons (2006); the Counter-Terrorism Strategy and its Implementation Plan (2013); the Integrated Maritime Security Strategy and its Implementation Plan (2014); and the Drug Action Plan (2016-2020) – but unfortunately, it seems that once adopted, these instruments remain largely ineffective. However, the article concludes, with new leadership in place Ecowas has an opportunity to invigorate its own structures and support West African countries to confront organised crime.
TALIBAN, ISIS MAKE MILLIONS FROM MINING AFGHAN MINERALS INCLUDING TALC
On 22nd May, the US forces’ newspaper Stars and Stripes reported that rising global demand for cosmetics, marble and stainless steel is helping Taliban and Islamic State militants in Afghanistan fund their increasingly violent insurgencies, according to an investigation by Global Witness. The militant groups make millions of dollars annually mining talc, chromite and marble in eastern part of the war-torn nation. The international NGO in a report estimates the Taliban earns $2.5 million to $10 million a year from mining talc alone. It is said that the vast majority of minerals from insurgent-controlled mines in Nangarhar openly goes through government-held territory on the main roads to Pakistan, and it is all but certain that individuals and companies in China, Europe and the US are effectively, if inadvertently, funding insurgent groups.
UPDATE TO AUSTRALIAN EXPORT CONTROLS FOR TANGIBLES
In an article on 9th May, Baker McKenzie reported that Australia’s export control rules for tangibles have been amended to more closely align with the regime for intangible supplies. The amendments are intended, so far as possible, to treat transfer of the same controlled subject-matter outside of Australia in a physical form consistently with intangible transfers (such as via email or allowing access by another intangible means). The changes made are detailed in the article. Meanwhile, an independent review underway aims to identify if there are any gaps in the Defence Control Act’s controls or any unintended consequences arising from the current operation of the Act.
CYPRUS TO CAP ITS ‘GOLDEN VISA’ PROGRAMME
EurActiv on 23rd May reported that, stung by criticism it has been selling European Union passports for cash, Cyprus has tightened vetting procedures in a scheme that grants Cypriot citizenship to investors, the finance minister has said. More stringent controls on the programme and a cap at 700 on the number of passports are involved. To be eligible for a Cypriot passport, foreigners must make at least a €2 million investment in either property, business or government bonds and base their permanent residence in Cyprus. Estimates say the scheme has generated around €4.8 billion — up until 2016.
AUSTRALIAN LAWMAKER CLAIMS BILLIONAIRE CONSPIRED IN UN BRIBERY SCANDAL
Deutsche Welle on 23rd May reported that a Chinese-Australian billionaire has been accused of involvement in a UN bribery scandal and his ties China’s Communist Party have also been called into question. Andrew Hastie, who chairs the country’s parliamentary intelligence and security committee, told parliament that Chau Chak Wing was the real estate developer codenamed CC-3 by the US FBI in an unsealed indictment. CC-3 is short for the third co-conspirator. Chau allegedly arranged to pay €170,000 in 2013 to the-then UN General Assembly President John Ashe to attend a conference in China, plus $25,000 to cover travel expenses of those accompanying Ashe. Hastie said US officials confirmed to him that the 63-year-old billionaire was CC-3 during his visit to the US last month.
CRYPTOCURRENCIES: POTENTIAL FOR TERROR FINANCING?
A briefing from ETH Zurich Center for Security Studies begins by saying that given their transaction anonymity and user-friendliness, cryptocurrencies appeal to extremist groups as they offer a viable alternative to the mainstream financial system and fiat money which are perceived as ‘kafir’ (infidel) currencies. The threat of cyber-driven terrorist financing is expected to grow. The article concludes that authorities need to harness the potential of cryptocurrencies and understand its mechanism to facilitate earlier detection of terror financing. Failure to do so would allow the unconstrained development of a potentially major financial apparatus waiting to be fully exploited by cyber-driven terrorism.
THE IMPACT OF THE EU-CANADA COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) ON THE UK
On 23rd May, the Department for International Trade published a research study used to inform the impact assessment for the UK ratification of CETA. It shows the potential consequences of this agreement for the UK economy.
see also an impact assemment –
CROOKED BUSINESSMEN CAUGHT WITH £5 MILLION WORTH OF FAKE DRUGS INCLUDING VIAGRA AND STEROIDS ARE JAILED
On 23rd May, the Leicester Mercury reported that 2 businessmen who were caught with more than £5m worth of counterfeit drugs including Viagra and steroids have been jailed. Asif Patel, 42, and Naushad Gaffar, 53, specialised in importing medicines for erectile dysfunction and premature ejaculation from the Indian subcontinent. They were arrested in April 2015 following a 9-month investigation by the MHRA. In one of the largest ever seizures of its kind, officials confiscated more than 1.6 million doses of illicit medicines and 46,000 doses of Class C drugs from storage units in south London.
UK: INTRODUCTION OF IVORY BILL BOOSTS FIGHT AGAINST ELEPHANT POACHING
On 23rd May, a news release from DEFRA reported that one of the toughest bans on ivory sales in the world is a step closer to coming into force in the UK as the Government introduced the Ivory Bill into Parliament. The Bill covers ivory items of all ages, not only those produced after a certain date, subject to some narrow, carefully-defined exemptions. The maximum penalty for breaching the ban will be an unlimited fine or up to 5 years in jail. The Bill provides for narrowly-defined and carefully-targeted exemptions for items which do not contribute directly or indirectly to the poaching of elephants.
£22 MILLION OF COCAINE AND FIREARM SEIZED BY JOINT NCA AND METROPOLITAN POLICE UNIT
A news release from the NCA on 23rd May advised that a man and a woman have been charged respectively with firearms and drugs offences as investigations by a joint NCA and Metropolitan Police unit targeted organised crime and associated violence from UK ports to London streets. The investigations are part of sustained efforts to tackle the range of threats posed by the Class A drugs trade, particularly undermining of UK border controls, and the use of violence and weapons by those controlling distribution within the UK. The seizure of 259kg of Class A drugs smuggled into the UK from Mexico, which were hidden inside a specially-constructed, industrial fruit processing machine, was one result of the investigations.
PORTUGUESE POLICE SEIZE BOAT WITH 1,800 KG OF HASHISH
Xinhua on 23rd May reported that a boat containing 1,800 kg of hashish has been seized off Portugal’s southern coast. The police intercepted a motorboat containing 60 bundles of the drug in an estuary outside Tavira, a town 300 km south of Lisbon, near the Spanish border. The bundles were being transferred onto a speedboat, having been brought in on the larger boat from Morocco. 3 men were arrested.
PUTTING NORTH KOREA’S BOMB IN A MUSEUM: A 3D VIRTUAL TOUR
On 1st May, NTI produced a novel 3D virtual reality tour displays the evolution of its capabilities since the 1990s. This museum is an immersive 3D environment in which anyone can wander among models of the missiles and nuclear devices, and read about their development, using a computer, smartphone, or VR device (Google Cardboard, Oculus Rift, etc).
SINGAPORE: AMENDMENTS TO THE CRIMINAL PROCEDURE CODE AND EVIDENCE ACT
Baker McKenzie on 23rd May reported that the Singapore Parliament has approved a suite of new criminal justice reforms. Under the previous regime, investigative agencies have the power to access, inspect and search data on computers. The amendments seek to clarify these powers. The amendments clarify that when investigators exercise powers of search and seizure or issue orders for production under any written law, their powers are subject to LPP unless the statute provides otherwise. Changes have also now been made to allow for video recording of statements. This will be implemented in phases. Deferred prosecution agreements (DPA) were part of another 6 amendments which were added to the original 50 proposed changes after discussions with the Law Society.
45,000 CIGARETTES SEIZED AT DUBLIN AIRPORT
A news release on 23rd May reported that Revenue officers at Dublin Airport seized 45,000 cigarettes when, during routine operations, they stopped and searched a passenger who had arrived from Nigeria via Frankfurt. The passenger, a 35 year old Nigerian man, was arrested.
DOCUMENTS LINK MAGNITSKY SUSPECT KLYUEV TO FBME BANK ACCOUNTS
On 23rd May, Business Mail in Cyprus reported that Dmitry Klyuev, the sanctioned Russian bank owner considered by the US as the mastermind of a tax fraud uncovered by Sergei Magnitsky, had indeed banked with FBME Bank, despite what its former owners claimed. The former owners of FBME Bank Ltd said that Dmitry Klyuev and Andrei Pavlov, both key suspects in the theft of $230 million in taxes uncovered by lawyer Sergei Magnitsky and placed on a sanctions list by the US, were not customers of the bank’s Cyprus branch.
DENMARK IN GLOBAL COURT CAMPAIGN TO RECOUP TAX FRAUD BILLIONS
Reuters reported on 23rd May that Denmark has launched 50 court cases around the world against foreign pension funds and other investors an effort to recoup up to £1.5 billion it alleges was paid out in fraudulent tax refunds between 2012 and 2015.
NEW UK SANCTIONS REPORTING COMPLIANCE FORM
On 23rd May, the European Sanctions Blog reported that OFSI had introduced a new form to help individuals and organisations to comply with the UK financial sanctions reporting requirements that came into force on 8th August. The posting explains that the form enables reporting of frozen assets and information about a suspected designated person an sanctions breaches, as well as giving information about the information OFSI requires in each of those areas.
CRIMINAL GROUP POSED AS SUPPLIERS FOR PUBLIC SECTOR ORGANISATIONS AND DUPED PRIVATE BODIES THROUGH FRAUD ONLINE
A news release from Europol on 23rd May about Operation Valcea-Cruces which began in early 2017 when law enforcement authorities exchanged information on different fraud cases. The crime ring, operating in different cells across Europe, was led from Romania where 5 individuals were arrested alongside 14 in Spain, resulting in 33 arrests in total during the course of the investigations. The organisation made more than EUR 8 million and opened almost 700 bank accounts in Spain to transfer the money made from their illegal activities. This money was later withdrawn or transferred to international bank accounts. The group operated in 2 ways:
- Posing as suppliers for public sector organisations and claiming organisations had payments outstanding. Once contact had been established, the organisations were told to transfer money to a new bank account – in reality opened by a money mule; and
- Committing online fraud against private bodies either by phishing or copying pictures from websites and republishing them, pretending to be official rental websites.
EU BRIEFING: MODERNISING TRADE DEFENCE INSTRUMENTS
On 23rd May, the EU Parliament Think Tank published a briefing paper which says that dumping and subsidising of exports by third countries are unfair trade practices that may cause injury to the importing country. WTO law allows to counter such injury by imposing specific duties known as trade defence instruments (TDI). To ensure EU TDIs are appropriate to tackle new challenges to international trade, such as raw-material distortions in exporting countries, the Commission proposed to modernise the EU’s basic anti-dumping and anti-subsidy Regulations. Since 1994, when EU TDI were originally enacted to transpose the WTO legal framework into EU law, they have only been amended to incorporate WTO case law. The EU now needs to address some shortcomings seen in TDI in terms of procedure and substance, to keep pace with a rapidly evolving trade environment.
FOILED FRENCH TERRORIST PLOT INDICATES INTENT TO DEPLOY BIOLOGICAL WEAPON
Janes.com on 23rd May reported that on 18th May the French interior minister announced that a terrorist plot involving “either explosives or ricin” had been thwarted. A 20-year-old student of Egyptian origin had been arrested in Paris in connection with the attack. Police raiding the suspect’s flat uncovered gunpowder, manuals on the construction of improvised explosive devices (IED), as well as a video on how to make ricin-based poison. The bio-toxin ricin can be obtained by extraction from castor beans, which can be easily and cheaply purchased in large quantities.
MACEDONIAN EX-PM SENTENCED IN CORRUPTION CASE
On 23rd May, Rferl reported A Macedonian court has sentenced former conservative PM, Nikola Gruevski to 2 years in jail for unlawfully influencing officials over the purchase of a luxury bulletproof vehicle. He remains free pending an appeal.
CHIEF COMPLIANCE OFFICER “AIDED AND ABETTED” AML OFFENCES
On 16th May, Compliance Week had reported that the SEC had announced that it settled charges against broker-dealers Chardan Capital Markets and Industrial and Commercial Bank of China Financial Services for failing to report suspicious sales of billions of penny stock shares and that Chardan’s chief compliance officer was also charged. In fact, according to the SEC, Jerard Basmagy, the chief compliance officer and AML officer for Chardan, “wilfully aided and abetted and caused” Chardan’s AML violations. The SEC charged Chardan with failing to file SAR when it knew, suspected, or had reason to suspect that certain penny stock transactions it executed on behalf of its customers involved the use of its firm to facilitate fraudulent activity or had no business or apparent lawful purpose.
GIBRALTAR SAYS IT WILL NOT YIELD AN INCH ON SOVEREIGNTY
Tax News on 23rd May reported that Gibraltar’s Deputy Chief Minister has told a cross-party delegation of UK parliamentarians that Gibraltar “will not cede an inch of its sovereignty, jurisdiction, and control,” discussing Spanish relations amid Brexit talk.
SADDAM HUSSEIN’S PRESIDENTIAL YACHT BECOMES A HOTEL
On 23rd May, Superyacht News reported that the 82 metre motoryacht, ‘Basrah Breeze’, will now operate as a hotel and recreation facility for maritime pilots who guide ships in and out of the port of Basra, Southern Iraq’s largest city. The vessel was built for the Iraqi dictator in 1981, although he never reportedly set foot on board. Following a court case in 2010, Iraq recovered the yacht after it had spent 3 decades overseas, during which it changed hands a number of times, including a stint in Saudi Arabia under the ownership of King Fahd bin Abdulaziz. The Iraqi government listed the yacht for sale at $30 million upon her return, but it never found a buyer.
PANAMA NAMES MOSSACK FONSECA LAWYERS UNDER INVESTIGATION FOR MONEY LAUNDERING
Kenneth Rijock in his blog on 23rd May provided the names of those which he says Panama’s Anti-corruption prosecutor has advised that it is continuing to investigate, saying that it has charged 10 of the firm’s staff with money laundering. The case, which arose out of the Brazilian “Java Leto,” or car wash, scandal is being handled with the co-operation of Brazilian authorities.