Day: June 17, 2018

17^th June 2018

MONEY-LAUNDERING BREACHES AT FIRM IN MALTA USED BY PM’S TOP AIDE

The Times of Malta on 16^th June reported that a local firm that held an “investment” account for the Prime Minister’s top aide, Keith Schembri, has been fined €38,750 for breaching a number of AML laws.  In an administrative penalty notice on its website, the FIAU said it imposed the fine after conducting an off-site compliance visit focusing on 4 unnamed business relationships established by MFSP Financial Management.  In the penalty notice, the FIAU said MFSP held information indicating that clients’ expected source and origin of funds would consist of savings or the sale of investments.  The FIAU found that certain transactions deposited in the investment portfolio came from “third parties”, instead of savings or investment sales. MFSP would have been expected to detect and query such discrepancies, the FIAU said.

https://www.timesofmalta.com/articles/view/20180616/local/money-laundering-breaches-at-firm-used-for-keith-schembri-investments.681877

UKRAINE “FAILS TO IMPOSE SANCTIONS AGAINST PUTIN’S FRIEND ARKADY ROTENBERG”

UA Wire on 16^th June reported that Russian oligarch Arkady Rotenberg and his company Minudobreniya avoided being added the list of individuals and legal entities against which Ukraine imposed economic sanctions.  The National Security and Defense Council of Ukraine (NSDC) told Deputy Serhiy Leshchenko that this was due to lack of proposals from the SBU (Ukrainian Security Service).  This seems odd, if true, as he is on US and EU (and hence UK) sanctions lists.

http://uawire.org/ukraine-did-not-impose-sanctions-against-putin-s-friend-rotenberg?src=ilaw

SHARP INCREASE IN MONEY MIGRANTS SEND HOME LIFTS MILLIONS OUT OF POVERTY – UN REPORT

UN News on 14^th June reported that a dramatic increase in the amount of money migrants send home to their families in developing countries is helping to lift millions out of poverty, according to a new report from the UN International Fund for Agricultural Development (IFAD).  The report highlights the role these funds – more than $445 billion in 2016 – play in helping development countries.  Sending Money Home covers a 10-year trend in migration and remittance flows from 2007-2016. While the report shows that there have been increases in sending patterns most regions of the world, the sharp rise over the past decade is in large part due to Asia which has witnessed an 87% increase in remittances.  Currently, about 200 million migrant workers support some 800 million family members globally.  This year it is expected 1-in-7 people globally will be involved in either sending or receiving more than $450 billion in remittances, according to the report.

https://news.un.org/en/story/2017/06/559472-sharp-increase-money-migrants-send-home-lifts-millions-out-poverty-un-report

SILK ROAD SENIOR ADVISER EXTRADITED TO USA FROM THAILAND

Finance Magnates on 17^th June reported the extradition of a Canadian citizen, Roger Thomas Clark, alleged senior adviser to the owner and operator of the infamous ‘Silk Road’ website.  It reminds one that Silk Road was a website founded in 2011 by a Texan man names Ross Ulbricht.  It was an online marketplace that maintained user anonymity by use of a software called Tor. Transactions were made using Bitcoin.  The site was operational from February 2011 until October 2013, when it was shut down by the FBI.

https://www.financemagnates.com/cryptocurrency/news/silk-road-consigliere-extradited-usa/?src=ilaw

SCANDAL INVOLVING LEASE OF KYRGYZSTAN’S MILITARY HELICOPTERS TO UGANDA

Alert 5 reports claims that the former President of Kyrgyzstan, Almazbek Atambayev, has been accused of corruption by renting the country’s military helicopters to Uganda.  It says that 4 helicopters donated by Russia had been leased to Uganda and the money for the lease went to an offshore account in UAE.

http://alert5.com/2018/06/16/scandal-involving-lease-of-kyrgyzstans-military-helicopters-to-uganda/

https://www.kommersant.ru/doc/3658144?from=four_mir

BIOLOGICAL ATTACK SUSPECT DETAINED IN GERMANY

Defence Web on 17^th June reported that German prosecutors in Cologne have an arrest warrant from a judge for a Tunisian man suspected of planning an Islamist-motivated attack and manufacturing a “biological weapon” using ricin.  The suspect bought 1,000 grains of ricin, a naturally occurring poison in castor beans and an electric coffee grinder online.

http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=52068:biological-attack-suspect-detained-in-germany&catid=49:National%20Security&Itemid=115

ATTACK SHUTS MAJOR LIBYAN OIL PORTS AND PRODUCTION SLASHED

Defence Web on 15^th June reported that the major Libyan oil ports Ras Lanuf and Es Sider had been closed and evacuated after armed brigades opposed to the powerful eastern commander Khalifa Haftar stormed them, causing a production loss of 240,000 barrels per day.

http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=52066:attack-shuts-major-libyan-oil-ports-production-slashed&catid=49:National%20Security&Itemid=115

FORMER MALAYSIAN PRIME MINISTER MAY FACE CHARGES OF MONEY LAUNDERING AND MISAPPROPRIATION OF PROPERTY

Baker McKenzie on 15^th June reported that Malaysian authorities investigating scandal-hit state fund 1MDB are considering charging former prime minister Najib Razak with money laundering and misappropriation of property.  Najib, 64, suffered a shock defeat in the May general election, the first change of government since Malaysia gained independence from Britain in 1957.

http://www.riskandcompliancehub.com/former-malaysian-prime-minister-najib-razak-may-face-charges-of-money-laundering-misappropriation-of-property/

Spiegel Online on 17^th June (originally published on 15^th June) carried a feature saying that Bilfinger, one of Germany’s best-known construction firms, pledged to clean up its global business practices as it pivoted to the oil sector.  The troubled company had a new, British CEO and his vision to turn the company around involved transforming it from a construction company that built bridges, tunnels and dams in Germany and throughout the world into a technical services provider for industry, including for the Middle East oil sector.  The article goes on to say that a court case pitting Bilfinger against its own fired investigator involves dozens of investigative reports that a team of Der Spiegel reporters was able to evaluate.  They are said to document myriad cases of suspected corruption that have never before seen the light of day – including deals in Oman, India, Vietnam, Thailand, Bangladesh, Abu Dhabi, Russia, Poland, Austria and Brazil, some of them as recently as 2015.  The US DoJ had installed a monitor in the company in 2014 after it was forced to admit that it had bribed politicians in Nigeria, and the company is required to report every suspicion of corruption and to investigate itself.

http://www.spiegel.de/international/germany/bilfinger-corruption-scandal-involving-oman-and-a-princess-a-1213167.html#ref=rss?src=ilaw

16^th June 2018

LIST OF CHINESE PRODUCTS TO BE SUBJECT TO US SECTION 301 TARIFFS AND CHINA RESPONDS BY IMPLEMENTING RETALIATORY TARIFFS IN KIND

On 15^th June, an International Trade, Investment and Market Access Alert from law firm Wilmer Hale detailed how both the Office of the US Trade Representative (USTR) and the Chinese Ministry of Finance announced that products imported under certain tariff lines from China and from the US, respectively, would be subject to an additional duty of 25%.  The Alert noted that the additional tariffs are only one part of the actions that the President has directed and that the Administration has already filed a request for consultations with China at the WTO with respect to certain Chinese technology licensing requirements.  It also plans to impose investment restrictions and export controls on Chinese companies in an effort to limit China’s acquisition of “industrially significant” technology (these investment restrictions will be announced by June 30^th).

https://wilmerhalecommunications.com/26/2570/june-2018/ustr-releases-list-of-chinese-products-to-be-subject-to-section-301-tariffs–and-china-responds-by-implementing-retaliatory-tariffs-in-kind.asp?sid=0a8b1c86-3f90-4bcc-8166-5d47efcc1e4e

BEIRUT AIRPORT “A SMUGGLING POINT FOR HEZBOLLAH”

The Washington Times on 15^th June published an article claiming that reports indicate that Hezbollah smuggles forces, weapons and drugs via Beirut Rafic Hariri International Airport, and that Hezbollah allowed the Iranian Revolutionary Guard Corps (IRGC) to use the airport as a base for transporting weapons and fighters to other locations and countries.

https://www.washingtontimes.com/news/2018/jun/15/pro-iranian-hezbollah-uses-beirut-airport-smugglin/

ASSET MANAGEMENT FIRM FINED BY IRISH CENTRAL BANK AFTER CLIENT LOST €650,000 IN CYBER-FRAUD

RTE on 15^th June reported that Appian Asset Management has been fined a total of €443,000 and reprimanded it for significant breaches of regulations which resulted in the loss of a client’s funds due to cyber-fraud.  This is said to be the first time the Central Bank has fined a company for the loss of client funds from cyber-fraud as a direct result of a firm’s “significant regulatory breaches and failures”.  Breaches, including in the AML regime, have been admitted.  In the wake of the incident the firm is said to have introduced new client asset and AML/CFT policies and procedures and introduced new controls in respect of the management of client assets.  It had been found to have inadequate policies and procedures to monitor transactions, detect and report money laundering and provide its staff with appropriate training.

https://www.rte.ie/news/business/2018/0615/970719-appian-asset-management-fine/

VIJAY MALLYA ORDERED TO PAY £200,000 ORDER COSTS TO INDIAN BANKS BY UK HIGH COURT

The Indian Express on 15^th June reported that Indian liquor baron Vijay Mallya has been directed to pay a minimum of £200,000 towards the costs incurred by 13 Indian banks –towards registration of the worldwide freezing order and of the Debt Recovery Tribunal (DRT) of Karnataka’s judgment in the UK.  As well as the debt recovery case launched by the banks, Mallya is also fighting an extradition to India on fraud and money laundering charges.  The final hearing in the extradition case is likely to take place on July 31^st.

https://indianexpress.com/article/india/vijay-mallya-ordered-to-pay-200000-pounds-to-indian-banks-by-uk-high-court/

MONEY LAUNDERING THROUGH THE BLACK MARKET PESO EXCHANGE (BMPE)

On 12^th June, Lane Powell PC published an article about BMPE, a trade-based money laundering technique commonly used by narcotics traffickers based in Colombia and Mexico.  It points out that the central feature is the use of a money trader to ensure that the revenue from drug sales in the US doesn’t actually cross any borders.  Instead, those dollars are used to purchase any number of legitimate commodities from unsuspecting businesses on behalf of legitimate South American businesspersons whose legitimate imports are used to obtain pesos for the drug cartels.

https://www.targetletterlaw.com/2018/06/12/money-laundering-through-the-black-market-peso-exchange/#page=1

For some additional information on BMPE and example cases, see –

https://www.gov.im/media/1348726/notice-1000-man-trade-based-money-laundering-29-sep-17.pdf

DRUGS BARON JAMES MULVEY’S £68 MILLION FINANCES TRACED THROUGH ISLE OF MAN COMPANIES

Birmingham Live on 16^th June reported that jailed drug baron James Mulvey funded his high-rolling lifestyle through offshore transactions that included £11.5 million going through one business alone.  Investigators are continuing to examine the multi-millionaire’s financial trail after he was jailed for smuggling cocaine and cannabis.  The funds were used to bankroll his kingpin’s lifestyle, which included building a lavish villa near Marbella on the Costa Del Sol.  He used haulage firms to transport concealed drugs from mainland Europe into Ireland via the West Midlands.  Investigators first identified companies in the Isle of Man and worked through hundreds of thousands of documents to follow the money.  Mulvey had utilised ‘enablers’ – accountants and solicitors within the UK and overseas – to launder the money through Monaco and into Mauritius to make it appear as if it come from a legitimate source.

https://www.birminghammail.co.uk/news/midlands-news/revealed-68m-drugs-baron-james-14789845

HAJJ FRAUD ROCKETS BY 150% – HOW TO AVOID BEING CAUGHT OUT

Birmingham Live on 16^th June published an article saying that up to 25,000 families are potentially at risk from Hajj fraud as they book trips to Mecca later this year.  Action Fraud is raising awareness of Hajj related fraud, in a drive to increase reporting and to protect individuals from falling victim, with a claim that, in 2017, the average reported loss to victims was £5,869.  In the fraud the accommodation booked does not exist, or the whole trip is in fact a scam set up by illegitimate travel operators who have disappeared with thousands of pounds of pilgrims’ money.

https://www.birminghammail.co.uk/news/midlands-news/hajj-fraud-rockets-150-per-14702786

HOME SECRETARY HAS USED AN EXCEPTIONAL POWER TO GRANT A SCHEDULE 1 LICENCE TO ALLOW BILLY CALDWELL TO BE TREATED WITH CANNABIS OIL

The Home Office blog on 16^th June reported that, following advice from senior clinicians, the Home Secretary has used an exceptional power to grant a Schedule 1 licence to allow Billy Caldwell to be treated with cannabis oil.  Schedule 1 of the Misuse of Drugs regulations 2001 covers drugs considered to be of no medicinal value, and a Schedule 1 licence is normally used where they are being imported for research etc.  The Guardian reminded one that Billy’s cannabis oil was confiscated at Heathrow Airport because it contains a psychoactive substance called tetrahydrocannabinol (THC) that is illegal in the UK but available elsewhere and had kept his epilepsy at bay.  After it was taken from him Billy suffered 2 seizures that other medicines could not control and he was taken to Chelsea and Westminster hospital by ambulance.

https://www.theguardian.com/society/2018/jun/16/billy-caldwells-mother-hopeful-of-cannabis-medicine-licence

https://homeofficemedia.blog.gov.uk/2018/06/16/home-secretary-issues-schedule-1-licence/

see also Home Office Drug Licensing Factsheet- Cannabis, CBD and other cannabinoids –

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/674713/Factsheet-_Cannabis__CBD_and_Cannabinoids-_January_2018.pdf

FOUNDER OF US TECH UNICORN THERANOS HIT WITH CRIMINAL CHARGES FOR ROLE IN A MULTI-MILLION DOLLAR SCHEME TO DEFRAUD INVESTORS

City AM on 16^th June reported that the US DoJ said it had filed criminal charges against Elizabeth Holmes and Ramesh “Sunny” Balwani, her former chief operating officer, for 2 counts of conspiracy to commit wire fraud and 9 counts of wire fraud.  The company had been hailed as a game changer in the blood-testing industry, offering devices that could test for conditions such as cancer through a finger-prick rather that drawing blood through needles.  However, US prosecutors found that the company had enticed investors to use this method while knowing they were not 100% reliable or accurate.

http://www.cityam.com/287663/theranos-founder-hit-criminal-charges-defrauding-investors?src=ilaw