13th June 2018
NORTH KOREA MUST COME CLEAN ABOUT ITS DIRTY MONEY
The Diplomat on 12th June carried an article saying that, in the light of the Trump-Kim summit, for any process to succeed, Kim must commit to coming clean about North Korea’s systemic and ongoing “dirty money habits” that have sustained its illicit nuclear programme and that Pyongyang must fully disclose the illicit financial networks it has used to raise money and procure materials for its weapons programmes. It says that North Korea has operated sophisticated overseas networks of shell companies and has scores of trusted agents to illegally finance and obtain the goods and technology through these fronts for its clandestine WMD programme. It argues that, as well as helping any denuclearisation process, disclosures about the financial networks would provide a wealth of information to international financial regulators and law enforcement agencies and would uncover significant hidden networks, providing valuable information about the weak spots in the global financial crime regulatory regime. Even if the information is not up-to-date, data indicating how North Korea set up illicit financing networks in the past would be of great forensic value to investigators.
CZECH POLICE CHARGE 60 IN DRUG SMUGGLING RING LED BY VIETNAMESE
eVN Express on 13th June reported that Czech police said that they had charged 60 people with drug trafficking after busting a ring suspected of smuggling more than 700 kg of cocaine and heroin to Australia via the US and Thailand. They claim that the gang was led by 3 Vietnamese organisers, 1 active in the Czech Republic and the other 2 in other countries and mostly used impoverished or indebted Czech nationals as couriers.
CHINESE COAST GUARD ARREST 48 FOR SMUGGLING DIESEL FUEL BY SEA
Xinhua on 12th June reported that the Chinese coast guard detained 48 people for smuggling diesel fuel and seized seven ships as well as 3,650 tonnes of fuel, authorities in east China’s Jiangsu Province said. It says that the ships sailed from coastal Zhejiang and Fujian provinces to the open sea to pick up the fuel.
CHINA SEIZES 955,800 TONNES OF FOREIGN GARBAGE IN JANUARY-MAY 2018
ECNS in China reported on 12th June that China has handled 248 cases of illegal trash imports (out of a total of 1,613 smuggling cases of all types) in the first 5 months of the year, seizing 955,800 tonnes of foreign garbage, the General Administration of Customs (GAC) said.
INDIA: SMUGGLERS TAKE ADVANTAGE OF DOMESTIC LEG OF INTERNATIONAL FLIGHT TO SNEAK IN GOLD BARS FROM DUBAI
The Hindu on 12th June reported that Custom officials had busted a gold smuggling racket involving an international traveller leaving the consignment in the seat, which will be picked up by a domestic traveller.
IRAN STEPS BACK FROM INTRODUCING ANTI-TERRORISM FINANCE RULES AS FRESH U.S. SANCTIONS LOOM
Forbes on 12th June reported that MPs have voted to suspend for 2 months discussion of a Bill that would have seen Iran sign up to the UN International Convention for the Suppression of Financing of Terrorism. The vote means that Iran will remain on the list of “high risk” jurisdictions compiled by FATF and has been since 2008. The only other country on the blacklist list is North Korea.
LITHUANIA POSTS INITIAL COIN OFFERING (ICO) GUIDELINES
Crowdfund Insider and others on 12th June reported that Lithuania has published a set of guidelines seeking to provide greater clarity for cryptocurrencies and initial coin offerings (ICO) and how/why AML/CFT law applies.
The Guidelines themselves may be found at –
UK ANTI-SLAVERY COMMISSIONER CRITICISES BUSINESS RESPONSE TO MODERN SLAVERY
On 4th June, Herbert Smith Freehills published an article saying that the Commissioner the response by some businesses to the Modern Slavery Act’s reporting obligation, suggesting that “patchy” compliance demonstrates a failure by some businesses to take human rights abuses seriously. The Commissioner’s role is to drive better practice and the reinforce the importance of good reporting as a means of demonstrating good practice. The Commissioner’s statement comes after the Business and Human Rights Resource Centre (the “BHRRC“) published its second review of FTSE100 Modern Slavery Statements. A business should take considered and context-appropriate steps to identify and respond to the risks of modern slavery in its business and supply chain. The effectiveness of those steps should be measured and the results reflected in improved practice. All of these steps should then be set out each year in the business’ annual Modern Slavery Statement.
EUROPEAN COMMISSION WARNS IMPORTERS AND EXPORTERS OF GOODS WITH POSSIBLE UK ORIGIN
On 12th June, Kelley Drye & Warren LLP published an article saying that on 4th June, the Commission advised economic operators to prepare for the consequences of the UK leaving the EU on their imports and exports. Following its withdrawal, UK inputs, including materials and certain processing operations, will no longer be considered EU origin for purposes of enjoying preferential treatment.
On 8th June, Bryan Cave Leighton Paisner published an article explaining what ransomware means, and providing some tips to businesses affected by what appears to be a ransomware attack.
THIRD COUNTRIES ALIGN THEMSELVES WITH EU SANCTIONS ON SYRIA AND NORTH KOREA
On 12th June, the EU Council announced that the former Yugoslav Republic of Macedonia, Montenegro, Serbia, Albania, Iceland, Liechtenstein, Norway, Moldova and Georgia had agreed to align their sanctions regimes in line with those of the EU.
NEW START-UP UK VISA ROUTE ANNOUNCED FOR ENTREPRENEURS
On 13th June, the Home Office announced a new route, announced during London Tech Week, will widen the applicant pool of talented entrepreneurs and make the visa process faster and smoother for entrepreneurs coming to the UK. It will replace a visa route which was exclusively for graduates, opening it up to a wider pool of talented business founders. It will require applicants to have acquired an endorsement from a university or approved business sponsor, including accelerators.
INTERNATIONAL ARREST WARRANT FOR FOOTBALL BOSS ZDRAVKO MAMIC
Total Croatia News on 13th June reported that a court in Croatia has ordered that a European Arrest Warrant, national and international arrest warrants be issued for the former Dinamo football club boss, said to have left for Bosnia-Herzogovina, for fraud.
OFFICIALS’ ASSETS FROZEN IN THAI WELFARE FUNDS CASE
The Bangkok Post on 13th June reported that the Anti-Money Laundering Office has impounded the assets of a former permanent secretary and 2 former high-ranking officials accused of demanding “change” from state welfare funds for the underprivileged. The suspects were employed at the Social Development and Human Security Ministry and are said to have “behaved dishonestly” in the handling funds allocated for payment to poor people.
MISSING DIAMOND REVENUE: MUGABE OFF THE HOOK UNTIL PARLIAMENT RECONSTITUTES AFTER ELECTIONS
On 13th June, News 24 in South Africa reported that former Zimbabwean president Robert Mugabe, who twice failed to turn up in parliament to give evidence on corruption in the diamond mining industry, is off the hook until parliament reconstitutes after general elections in July. A committee wants an explanation of his 2016 claim that Zimbabwe lost US $15 billion in revenue due to corruption and foreign exploitation in the diamond sector.
BROTHERS WHO RAN 7-YEAR HEALTH FRAUD SCAM FACE SENTENCING IN US
ABC News on 13th June reported that 2 brothers who ran a bribes-for-referrals health fraud scam that brought in more than $100 million over several years are to face sentencing, in a case that already has produced more than 50 guilty pleas or convictions. David and Scott Nicoll were arrested in 2013 and pleaded guilty to conspiracy and money laundering through their New Jersey company, Biodiagnostic Laboratory Services.
US TREASURY SANCTIONS ON CAMBODIAN PM’S BODYGUARD CHIEF FOR RIGHTS ABUSES
Radio Free Asia on 12th June reported that the US has imposed financial sanctions on General Hing Bun Hieng, the head of Cambodia Prime Minister Hun Sen’s bodyguard unit, for its role in “multiple attacks on unarmed Cambodians over the span of many years”.
BRITISH OVERSEAS TERRITORIES IN TALKS TO KEEP TAX HAVEN SECRECY
The Guardian on 13th June reported that leaders of British Overseas Territories are to hold 2 days of showdown talks with ministers in an attempt to reverse the UK decision to impose mandatory public beneficial ownership registers.
NEW GUERNSEY DIGITAL ID CARD AIMS TO REDUCE IDENTITY THEFT
ITV News on 13th June reported that a new digital ID card is being launched in Guernsey to make it safer for young people to verify their identity online. The CitizenCard scheme has been in place for a number of years and has now teamed up with the Yoti app which will let people prove their age and identity to businesses, verify the details of people online, and log in to websites without having to remember passwords.
COMPANY SECRETARY WHO SWINDLED AIRBUS OUT OF ALMOST £132,000 JAILED FOR 2½ YEARS
On 12th June, The Standard reported that Carena Jane Land, 54, pleaded guilty to fraud by an abuse of her position at the Airbus plant at Broughton between 2012 and 2016, relating to expenses for teams of engineers sent to carry out aircraft repairs.
CONSIDERING THE BENEFITS OF A BENEFIT LIMITED LIABILITY COMPANY (BLLC)
On 12th June, Workman Nydegger published an article saying that Utah became one of a handful of states to offer a new type of vehicle, the benefit limited liability companies (BLLC). It explains that a BLLC has a stated purpose of creating general or specific public benefit and, in the corporate context, this allows a board of directors greater freedom to make decisions that benefit the public good even if those decisions do not directly benefit the bottom line. The article deals with how to establish a BLLC and if one should consider doing so.
P3 Utah supplies a set of FAQ on BLLC at –
MOLDOVA NEEDS TO SHAKE MONEY-LAUNDERING REPUTATION, CENTRAL BANK CHIEF SAYS
Baker McKenzie on 12th June reported that the head of Moldova’s central bank said major foreign banks were increasingly wary of working in the ex-Soviet nation after a spate of money-laundering scandals in recent years, despite progress overhauling the country’s banking system. It mentions that the country was nearly bankrupted in 2015 after $1 billion was stolen from 3 of its largest banks, and from 2011 to 2014, some $22.3 billion of Russian money was allegedly laundered through the Moldovan financial system.
UK CYBER SECURITY EXPORTS WORKING GROUP
On 12th June, Tech UK reported that the Department for International Trade (DIT) and techUK hosted the first meeting of the ‘Cyber Security Exports Working Group’. The minutes of the meeting are reproduced. It was said that the human rights guidance designed to help manage the risks of exporting cyber capabilities and which was published in 2014 is to be updated over the next 6 months. The Department noted that a new cyber security page was due to launch soon on the government’s export promotion website.
ROMANIAN NATIONALS ARRESTED IN US FOR FRAUD AS PART OF NATION-WIDE ORGANISED CRIME RING
The Journal Sentinel on 12th June reported that 2 men had been arrested in Wisconsin for “multiple counts of forgery of financial transaction cards” and said to be involved in what was described as a nation-wide Romanian organised crime ring. Both are Romanian nationals and hold California ID cards.
FAILED BY FORENSICS?
A BBC Radio “File on 4” documentary investigates mounting concern about forensic science in England and Wales – hearing the cases of 2 men who almost went to prison for rape because the police failed to properly investigate crucial evidence on mobile phones, “digital forensics”. The programme hears that a criminal investigation is underway into one company providing forensic evidence, another has gone bust and a third has had to be financially bailed out. Meanwhile some police forces carry out their own forensic work but some do so without the official accreditation that forensic companies are expected to obtain. And the regulator says she can’t do anything about it as the Government won’t give her the powers she needs.
RBSI WINS APPEAL IN GIBRALTAR MARRACHE CASE
The Gibraltar Chronicle on 13th June reported that rhe Royal Bank of Scotland International (RBSI) was cleared of any liability in the loss of money defrauded by brothers Benjamin, Isaac and Solomon Marrache from an Irish client of their law firm, Marrache & Co, prior to its collapse. It was held by the Court of Appeal in London that a judge had been wrong to suggest bank employee Howard Shaw “dishonestly assisted” the Marraches to defraud their client.
PODCAST: WHERE GDPR AND DUE DILIGENCE COLLIDE
In the latest TRACE podcast, Illya, privacy counsel with TRACE, discusses the direct conflict between the GDPR and robust anti-bribery due diligence and TRACE’s efforts to press for revisions to laws for a carve-out for due diligence.
COUNTERING THE ILLICIT ARMS TRADE: NEW PROPOSAL FOR AN INTEGRATED EU APPROACH
On 13th June, the EU adopted a Joint Communication proposing elements for a comprehensive EU Strategy against illicit firearms and small arms and light weapons (SALW). A broad range of governmental agencies, including police, customs, border guards, armed forces, export control and judicial authorities are required to act in a more integrated manner to tackle such transnational threats. The Joint Communication aims to guide collective EU action inside the EU and abroad, to prevent and curb the illicit acquisition of firearms by terrorists, criminals and other unauthorised actors, as well as to promote accountability and responsibility with regard to the legal arms trade. The elements proposed for the new Strategy takes into account the evolving security context and relevant elements, such as the growing threat of terrorism inside the EU, technological and legislative developments. It entails a set of actions to be taken at national, regional and international level and would replace the one that was adopted by the European Council in 2005.
EU: TAX REVENUES AS A PERCENTAGE OF GDP GREW SLIGHTLY IN 2016
On 13th June, the EU reported a study from the Commission that showed that tax revenues rose in 19 Member States in 2016 as a percentage of GDP in 2016. The findings are in the 2018 edition of the Taxation Trends report, a yearly snapshot of tax systems in the EU, Iceland and Norway that provides extensive and comparable data on the different tax structures and rates of Member States. his report offers a breakdown of comparative tax levels in the EU and of tax revenues raised from consumption, labour and capital. It also contains data on energy, environmental and property taxation, plus rates for personal and corporate income taxes.
TRAVEL WARNING ISSUED FOLLOWING MOZAMBIQUE ATTACKS
Defence Web reported on 13th June that the UK advised citizens against travelling to north-eastern Mozambique after a series of attacks by groups with links to Islamic militants. At least 17 people were killed – 10 beheaded -since May in Palma, near the Tanzanian border.
AWARD-WINNING SMART DRONES TO TAKE ON ILLEGAL FISHING
Defence Web on 13th June reported that drones guided by artificial intelligence to catch boats netting fish where they shouldn’t were among the winners of a marine protection award and could soon be deployed to fight illegal fishing, organisers said. The award-winning project aims to help authorities hunt down illegal fishing boats using drones fitted with cameras that can monitor large swathes of water autonomously. The National Geographic Society awarded the project, co-developed by Morocco-based company ATLAN Space, and 2 other innovations $150,000 each to implement their plans as it marked World Oceans Day.
CODES OF PRACTICE AND GUIDANCE FOR MAKING AN APPLICATION UNDER THE REGULATION OF INVESTIGATORY POWERS ACT 2000
On 13th June, the UK Home Office reissued a webpage that brings together all documents relating to the RIPA codes. Included are revised codes of practice under Parts 2 and 3 of the Act following a consultation that ran from 16th November to 28th December 2017
MAN ‘SET UP WEB DESIGN FIRM AS FRONT FOR MILLION POUND FRAUD, DRUGS AND MONEY LAUNDERING SCHEME’
The Press & Journal in Scotland on 13th June reported that a man is to stand trial accused of setting up a web-design firm as a front for a million-pound fraud, drug dealing and international money laundering operation. Dale Pearson is said to have scammed a £250,000 mortgage before “concealing, disguising, converting and transferring” cash and bitcoins amounting to £789,046.64 over the course of 6 years, and to have transferred money out of the country to banks and businesses in Pakistan, China, Dubai and Hong Kong as part of the alleged scheme.
15-YEAR DIRECTOR BAN OVER MULTI-MILLION POUND VAT FRAUD
Accountancy Daily on 13th June reported that a director involved in a multimillion VAT fraud has been given a maximum 15-year disqualification following an investigation by the Insolvency Service in the UK into a ‘missing trader’ (MTIC) transaction chain. Ulhaque Ahtamad was the sole director of Masstech Ltd, a carbon emissions allowance and metals trader based in Gerrards Cross.
DRUGS BOSS FROM UK WHO TRAFFICKED DRUGS TO IRELAND CONVICTED AFTER ARREST IN LITHUANIA
On 13th June, a news release from the NCA reported that a man from Solihull has been convicted of being the head of an organised crime group involved in the importation and supply of drugs on an industrial scale. James Mulvey, 42, was apprehended in Lithuania on a European Arrest Warrant in March 2017 following a 2-year investigation by the NCA. NCA investigators worked with the West Midlands Regional Asset Recovery team, HMRC, and law enforcement in over 9 countries to collate and analyse extensive financial and telephone evidence which proved Mulvey was the mastermind behind a large-scale drugs conspiracy in 2006 and 2007. He used bogus haulage businesses ran by members of his network to import cocaine and cannabis from Holland to Ireland via the UK.
THE GOOD, THE BAD AND THE UGLY: REVISED CANADIAN AML/CFT REGULATIONS
On 13th June, Blake Cassels & Graydon produced a comprehensive article on revisions introduced to Canadian AML regulations and published on 9th June. Highlights include the regulations of virtual currencies, businesses providing foreign money services and pre-paid products. In addition, the life insurance sector is to become subject to the same requirements as other financial entities in respect of any loan or pre-paid products that they offer. There is a 90-day comment period for these regulations, expiring on September 9th.
FORMER IMMIGRATION OFFICIAL AS THE ‘MAIN PLUNDERER’ WHO EXTORTED $939,750 FROM PHILIPPINE CASINO AND ONLINE GAMBLING OPERATOR
Calvin Ayre on 13th June reported that the Philippine Ombudsman has named a former Immigration official as the ‘main plunderer’ who extorted the money from Jack Lam. Philippine immigration officials took advantage of a situation to allegedly ask for bribes in exchange for the release of the arrested Chinese nationals after Interpol targeted a number of Chinese-facing operators who were reportedly involved in online gambling, fraud and extortion activities in 2016.
SHAM MARRIAGE NETWORK DISMANTLED IN DENMARK AND GERMANY
Europol reported on 13th June that Europol’s European Migrant Smuggling Centre and Eurojust assisted the German and Danish national authorities in detecting and dismantling an organised crime group that used sham marriages with EU citizens to grant permanent residence permits to illegal migrants from Asia – which has been active since 2015, is known to have smuggled approximately 1,200 migrants into the EU, charging up to €13,000 per person for its services. Its members are suspected of having committed the crimes of migrant smuggling, document forgery, incitement and assistance to bigamy, as well as bribery. The joint operation was the result of an 18-month co-ordinated investigation in the framework of a joint investigation team (JIT). The JIT, established with the support of Eurojust, provided the necessary mutual legal assistance and helped to simplify the co-operation between the national authorities considerably.