Day: June 20, 2018

20^th June 2018

STRICT EXPORT REGULATIONS “MAY BE COSTING US INDUSTRY BILLIONS IN FOREIGN SALES” OF UAV

Defense News in the US on 19^th June carried an article saying that a new report from RAND assessing the proliferation of unmanned aerial vehicles (UAV) suggests existing export controls for drones may hurt the US more than it helps.  It says that limiting US drone exports has left a hole in the global market for the technology, especially in historically US-dominated Middle East markets, which has been readily filled by competitors — specifically China and Russia.  It goes on to say that whilst the Trump Administration recently unveiled new export policies regarding military technology in an attempt to facilitate the transfer of military technology, but the changes do not change the status of drones under the Missile Technology Control Regime (MTCR), which has the effect of imposing a “strong presumption of denial” on US UAV, meaning they are only exported in rare circumstances.  However, RAND found many countries already use such “Category I” machines, and others UAV just under the Category I limit.  It says that Rand expects to “grow from about $6 billion in 2015 to about $12 billion in 2025”.

https://www.defensenews.com/newsletters/unmanned-systems/2018/06/18/strict-export-regulations-may-be-costing-us-industry-billions-in-foreign-sales/

TOP TIPS FOR ASSESSING CFIUS APPLICATION

In a June 2018 commentary, law firm Jones Day says that the Committee on Foreign Investment in the United States (CFIUS), which currently has jurisdiction over foreign direct investment transactions that could result in foreign control over a US business, remains an important consideration for foreign parties looking to invest in the US and has and is developing (as changes are also underway in the EU and UK).  The commentary offers 10 practical tips relating to CFIUS and the CFIUS review process, in case of concern that deals will be vetoed by CFIUS because, for example, the fear of it leading to unwanted technology transfer to China.  One of the 10 tips concerns Export Control and Economic Sanctions Issues, saying that understanding the export control status of the products is critical to evaluating the nature and extent of CFIUS risk.  Also, CFIUS clearance is not a licence to export-controlled technology or products to the country of nationality of the foreign buyer.  In addition, CFIUS regularly requests information regarding a foreign buyer’s business dealings with US-sanctioned countries and entities and gathering such information can be challenging and not providing information relating to all relevant business may result in CFIUS rejecting the filing.

https://jonesday-ecommunications.com/234/2562/june-2018/top-10-practical-tips–.asp?sid=ce5dde34-30eb-4808-b2c3-f18ea1a9d951

VIETNAM: MDMA DISCOVERED IN PARCELS SENT FROM EUROPE (INCLUDING THE UK) VIA POSTAL SERVICE

On 19^th June, Vietnam Plus reported that Hanoi police had discovered methamphetamine drugs hidden in a parcel sent from the UK to Vietnam.  A nylon bag containing 102 MDMA (ecstasy) pills were found inside the parcel, which had been declared as electrical components and switches.  Earlier, on 13^th June a parcel with MDMA inside transported from the Netherlands by express mail (EMS) to Vietnam was discovered.  On April 20^th about 9.35 kg of methamphetamine drugs were seized from a parcel from Belgium to Vietnam sent via EMS.

https://en.vietnamplus.vn/drugs-discovered-in-parcel-sent-from-uk-via-postal-service/133164.vnp

2 SENTENCED IN MIAMI IN TRADE-BASED MONEY LAUNDERING CASE

The Latin American Herald Tribune on 20^th June reported that the owners of a Miami export business have been sentenced for $100 million unlicensed money transmitting and international money laundering scheme.  They were sentenced for their roles in funnelling more than $100 million through the US financial system on behalf of various foreign businesses based predominantly in Venezuela.  They used Miami Equipment and Export Company, a company they owned in Doral, Florida, to make the transmission on behalf of KCT, a large Venezuelan consortium of construction companies, and other entities located in Central and South America. After they received these funds from KCT or other companies, the defendants received instructions concerning where to send the money as well as fake invoices and contracts purporting to set forth a valid business reason for these payments.  The fake invoices and contracts made the payments appear connected to legitimate business services being provided to their company, such as consulting or engineering services.

http://www.laht.com/article.asp?ArticleId=2459251&CategoryId=10717

FORMER RUSSIAN PARLIAMENTARIAN VLADIMIR KHMEL ARRESTED IN SPAIN FOR LAUNDERING MILLIONS OF EUROS

Crime Russia on 19^th June claimed that Russian entrepreneur Vladimir Khmel, who settled in Tenerife 9 years ago, had been arrested on suspicion of laundering money through real estate investments and tax evasion for €17 million.  He was the former deputy of the Legislative Assembly of the Primorye Territory of Russia, but it is said he fled Russia after several criminal cases on large-scale smuggling of Chinese goods were instituted against him.  It is alleged that, through his companies Global Bigfishing SL, Canary International Business Transconsulting SL, La Estrella Favorita SL, Canary Dream Charter SL, Sancho Panza Enterprises SL and Canariasxperiencie, he has invested in Spain the money he illegally obtained in Russia.

https://en.crimerussia.com/financialcrimes/ex-parliamentarian-vladimir-khmel-arrested-in-spain-for-laundering-millions-of-euros/

METROPOLITAN POLICE SEIZES RECORD £94.6 MILLION HAUL FROM CRIMINALS

Manx Radio on 20^th June carried a report saying that the Metropolitan Police seized a record £94.6m from criminals in London in the last year, an increase of 40% on the previous 12 months.  £55.5 million came from post-conviction confiscation orders. Virtual currencies are also included in the final total, with one case currently under investigation involving more than £4 million in various forms of digital cash being frozen.  All of the money forfeited and confiscated is paid to the Home Office, which then returns a percentage to the force – in 2017/18, the Metropolitan Police received £9.55 million.

https://www.manxradio.com/news/uk-news/metropolitan-police-seize-record-and16394-6m-haul-from-criminals/

IRELAND: PERSONAL LIABILITY FOR CORPORATE CRIMES – CAN DIRECTORS AND MANAGERS BE PROSECUTED?

Irish law firm Matheson on 14^th June posed and answered the question, saying that when regulators start corporate investigations, we are often asked whether directors, managers and other company officers can be prosecuted.  The answer can be “yes”.  An Irish Court of Appeal decision of January 2018 has clarified when prosecutions of individuals can occur., holding that individual liability depends on whether the individual has functional responsibility for a significant part of the company’s activities and direct responsibility for the area in controversy.  The article goes on to explain more clearly what this means.

https://www.matheson.com/news-and-insights/article/personal-liability-for-corporate-crimes-can-directors-and-managers-be-prose

 

DRAMATIC RISE IN US SAR 1996-2015

https://www.the-american-interest.com/2018/06/18/the-worlds-largest-tax-haven-guess-who/

SLOVAK FARMERS DRIVE TRACTORS INTO CAPITAL TO PROTEST ALLEGED EU SUBSIDY FRAUD

EurActiv on 20^th June reported that dozens of farmers from across Slovakia drove their tractors into the capital Bratislava to protest against alleged irregularities in EU farm subsidy payments first made public by murdered journalist Jan Kuciak.

https://www.euractiv.com/section/justice-home-affairs/news/slovak-farmers-drive-tractors-into-capital-to-protest-alleged-eu-subsidy-fraud/

GAMBLING FIRM HIT WITH £2 MILLION PENALTY IN UK OVER PROBLEM GAMBLER

The BBC on 20^th June reported that 32Red has been hit with a £2m penalty for failing to protect a problem gambler, who was allowed to deposit £758,000 with no money laundering or social responsibility checks.

https://www.bbc.co.uk/news/business-44544950?src=ilaw

CHANNEL ISLANDS: MEETING FOR SHAREHOLDERS OF COMPANY LINKED WITH ALLEGED $150 MILLION FRAUD

The Bailiwick Express on 20^th June reported that shareholders and creditors of a fund linked with an alleged $150 million “fraud scheme” that lost some Jersey investors their life savings are due to meet.  Guernsey-based Providence Investment Funds PCC Limited collapsed in August 2016 and is now under administration management.  The meeting will be held under the island’s ‘Protection of Investors’ law.  It comes months after the bosses of the Miami-based parent company – Antonio Carlos De Godoy Buzaneli (56) and Jose Manuel Ordoñez Jr (46) – were arrested.  In Jersey, Lumiere’s former Managing Director, Christopher Byrne, will face a 6-week trial in August over more than a dozen charges relating to alleged dishonesty in dealing with investors in the Providence Fund.

https://www.bailiwickexpress.com/jsy/business/meeting-shareholders-company-linked-alleged-150million-fraud/?src=ilaw&t=i#.WyoIe_ZFx9A

 HOW DID THE PNB BANK FRAUD IN INDIA HAPPEN?  A 162-PAGE REPORT LAYS BARE THE LAPSES

Livemint on 20^th June carries a story saying that the $2 billion fraud may have been orchestrated by a few rogue employees, but it escaped detection because of widespread risk-control and monitoring lapses in many areas of the bank, according to the bank’s own internal probe.   India’s second-biggest state-controlled lender has previously alleged that a handful of staff at a single Mumbai branch issued fake bank guarantees over several years to help 2 jewellery groups.   The report does not say whether the PNB investigators believe those involved in the monitoring failures were aware of the fraud.

https://www.livemint.com/Companies/QVrxBXaZBX2t82KkFBSAOL/How-PNB-fraud-happened-A-162page-report-lays-bare-the-laps.html?src=ilaw

US LAWMAKERS SAY ‘GOLDEN TICKET’ VISAS FOR INVESTORS NEED OVERHAUL

Bloomberg on 19^th June reported that a visa programme that offers wealthy foreigners legal residence in the US if they invest in projects that create jobs needs to be overhauled or eliminated because of concern over fraud and threats to national security, senators from both parties said in a rare moment of bipartisanship. Congress created the EB-5 programme in 1990 to boost economic development, especially in low-income and rural areas.

https://www.bloomberg.com/news/articles/2018-06-19/-golden-ticket-visas-for-investors-need-overhaul-lawmakers-say?src=ilaw

CANADA TAKE AIM AT TERRORIST USE OF CRYPTOCURRENCIES, PREPAID CARDS

Canoe.com on 19^th June reported that the Canadian federal government is proposing measures that take aim at shadowy payments made by terrorists and money launderers using virtual currencies and prepaid credit cards.  The planned regulations would help close loopholes in Canada’s AML regime and address shortcomings pointed out by FATF.  The government is accepting public comment on the planned measures until early September.

http://canoe.com/news/national/feds-take-aim-at-terrorist-use-of-cryptocurrencies-prepaid-cards?src=ilaw

https://globalnews.ca/news/4284404/terrorists-criminals-bitcoin-fraud-ottawa/?src=ilaw

NOTICE TO EXPORTERS 2018/14: EU RENEWS RUSSIA CRIMEA AND SEVASTOPOL SANCTIONS

On 20^th June, the UK Export Control Joint Unit published Notice to Exporters 2018/14 notifying the renewal until June 2019 of the EU sanctions.

https://www.gov.uk/government/publications/notice-to-exporters-201814-eu-renews-russia-sanctions-concerning-annexation-of-crimea-and-sevastopol/notice-to-exporters-201814-eu-renews-russia-sanctions-concerning-annexation-of-crimea-and-sevastopol

MEMBERS OF HUGE DRUG-IMPORTATION CONSPIRACY TO SPEND LONGER IN JAIL AFTER APPEAL

The UK Attorney General’s Office issued a news release on 20^th June saying that David Reece and Everton Bailey who were arrested as part of an investigation into a large-scale drug conspiracy will spend longer behind bars after the Attorney General referred the sentence to the Court of Appeal for being too low.  Reece and Bailey were both originally sentenced to 16 years’ imprisonment but the Court of Appeal increased their sentences to 19 years each.  In May 2017 a shipment of 142.5kg of high purity cocaine and heroin with a street value of £66.5 million was stopped in Belgium. The investigation identified 38 similar trips, at least some of which would have involved similar amounts of drugs.

https://www.gov.uk/government/news/members-of-huge-drug-importation-conspiracy-to-spend-longer-in-jail

NORWAY’S NEW GAMBLING REGULATOR PREPARES FOR BATTLE WITH ONLINE OPERATORS

Calvin Ayre on 20^th June reported that Norway has appointed a new gaming regulatory chief, just as the country prepares to go to war with unauthorised online gambling sites.  Earlier this month, Norway’s government submitted the text of its “regulations concerning the prohibition of the processing of payments for gambling without a Norwegian license” to the European Commission for approval and Norway hopes to impose the new rules by January 1^st 2019.  Norwegian banks are already prohibited from directly processing payments on behalf of international gambling sites but the new rules make it clear that they are also forbidden from handling “payment transactions to and from companies that carry out payment transactions on behalf of gambling companies”.

https://calvinayre.com/2018/06/20/business/norway-regulator-online-gambling-payments/

WILDLIFE CRIME: GLOBAL SEIZURES AND ARRESTS IN TRANSCONTINENTAL OPERATION

A news release from Interpol on 20^th June reported that an international operation against the illegal trade in wildlife and timber has seen hundreds of seizures worldwide as well as suspects arrested.  Codenamed Thunderstorm and targeting the people and networks behind global wildlife crime, the operation involved police, customs, border, environment, wildlife and forestry agencies from 92 countries and resulted in millions of dollars-worth of seizures.  The month-long operation in May has so far brought 1,974 seizures and the identification of some 1,400 suspects, triggering arrests and investigations worldwide.  Further arrests and prosecutions are foreseen as ongoing investigations unfold.  The second in a global ‘Thunder’ series initiated by the Interpol Wildlife Crime Working Group, co-ordinated by Interpol and the World Customs Organization (WCO) in conjunction with the International Consortium on Combating Wildlife Crime (ICCWC), which includes the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) Secretariat, UNODC and the World Bank

https://www.interpol.int/News-and-media/News/2018/N2018-058

CHINA’S SANCTIONS ENFORCEMENT ON NORTH KOREA EASES AFTER THE SUMMIT

38 North reported on 19^th June that reports are now coming in regular intervals that Chinese enforcement of sanctions on North Korea is becoming less and less strict following the summit between Donald Trump and Kim Jong-un.

https://www.38north.org/articles/affiliates/north-korean-economy-watch/15617/

ISLE OF MAN NOTIFIES IRAQ AND ISIL/DA’ESH/AL-QAIDA SANCTIONS CHANGES

On 20^th June, the Isle of Man issued 2 news releases notifying that the Central Bank of Iraq had been removed from the lists of those subject to sanctions, and Abdulpatta Escalon ABUBAKAR and Myrna Ajijul MABANZA added to the ISIL/Da’esh/Al-Qaida lists.

https://www.gov.im/news/2018/jun/20/financial-sanctions-isil-daesh-and-al-qaida/

https://www.gov.im/news/2018/jun/20/financial-sanctions-iraq/

HUMAN TRAFFICKING: SPAIN ACHIEVED PROGRESS, BUT FURTHER ACTION NEEDED AGAINST TRAFFICKING FOR LABOUR EXPLOITATION

A Council of Europe news release on 20^th June advises that Spain has made progress in developing the legislative, institutional and policy framework against trafficking in human beings. However, improvements are needed in a number of areas, in particular more efforts are required to tackle trafficking for labour exploitation, says the Council’s Group of Experts on Action against Trafficking in Human Beings (GRETA) in a new report.

https://www.coe.int/en/web/portal/-/human-trafficking-spain-has-achieved-progress-but-further-action-is-needed-against-trafficking-for-labour-exploitation

OFFENSIVE AND DANGEROUS WEAPONS: NEW OFFENSIVE WEAPONS BILL IN UK

On 20^th June, the Home Office published a news release on a new Bill introduced into Parliament following a public consultation exercise that closed on 9^th December.  The new offences proposed are concerned with –

• proposals for new knife and amended offences
• updating the definition of a flick knife
• proposals for new acid and corrosive offences making it an offence to sell products with certain corrosive substances to under-18s and making it an offence to possess a corrosive substance in a public place
• proposal on firearms law to prohibit .50 calibre ‘materiel destruction’ rifles and rapid-firing rifles under section 5 of the Firearms Act 1968

https://www.gov.uk/government/consultations/offensive-and-dangerous-weapons-new-legislation

https://www.gov.uk/government/news/government-introduces-new-offensive-weapons-bill-to-tackle-serious-violence

INDIA: BANK OF MAHARASHTRA OFFICIALS AMONG 6HELD IN FRAUD BY DSK GROUP

The Times of India on 20^th June reported that the Chairman/MD and an executive director of the bank were amongst 6 arrested for alleged involvement in a fraud.  Police have also arrested DSK’s chartered accountant and the vice-president of its engineering department.  The fraud is said to relate to the siphoning of large amounts of money raised by the DSK Group of companies through investors as well as banks and financial institutions, non-convertible debentures and money collected from home buyers in various housing projects.

https://timesofindia.indiatimes.com/business/india-business/bank-of-maharashtra-cmd-ed-among-six-held-in-rs-2043-crore-fraud-by-dsk-group/articleshow/64666070.cms?src=ilaw

SPANISH BANKS MOVE AHEAD WITH BLOCKCHAIN PLATFORM FOR DIGITAL ID

Finextra on 20^th June reported that a consortium of Spanish banks is moving ahead with the development of a blockchain-based digital identity platform slated for live testing before the end of the year, a project to verify the identities of new clients and share the data with other consortium members.

https://www.finextra.com/newsarticle/32284/spanish-banks-move-ahead-with-blockchain-platform-for-digital-ids/vcurrency?src=ilaw

OVERSEAS BUSINESS RISK – IRELAND

On 20^th June, the UK Department for International Trade published this updated briefing providing details of the intellectual property, organized crime, human rights, bribery and corruption and terrorism risks that UK businesses may face when operating in Ireland.

https://www.gov.uk/government/publications/overseas-business-risk-ireland/overseas-business-risk-ireland#terrorism

PEOPLE-SMUGGLING RINGLEADER ARRESTED IN JOINT UK/BELGIAN OPERATION

An NCA news release on 20^th June reported that the suspected ringleader of an organised criminal network thought to be behind hundreds of attempts to smuggle migrants into the UK has been arrested by the NCA.  31-year-old Albanian national Alket Dauti was detained at his home address in Penge, SE London.

http://www.nationalcrimeagency.gov.uk/news/1392-people-smuggling-ringleader-arrested-in-joint-uk-belgian-investigation

POLICE RAID ADDRESSES ACROSS CROATIA TO BREAK ARMS TRAFFICKING NETWORK

Europol on 20^th June reported that on 18^th June the Croatian National Police identified 19 suspects of a criminal gang involved in international arms trafficking and smuggling, arresting 17 of them, in close co-operation with the German authorities and Europol. Over 40 weapons bound for Western Europe were seized as a result of co-ordinated raids across Croatia and Germany.

https://www.europol.europa.eu/newsroom/news/police-raids-addresses-across-croatia-to-break-arms-trafficking-network

PROFESSIONAL FRAUDSTERS ARRESTED OVER DODGY SHOPS IN €8 MILLION SCAM INVOLVING “TRANSACTION MONEY LAUNDERING”

On 20^th June, KYC 360 reported that police forces across Europe Police have arrested scores of individuals they believe are partly responsible for over 20,000 fraudulent transactions worth over €8 million.  The fraud was conducted by professional fraudsters, skilled in e-commerce fraud, who set up fake online shops and bought and sold credit card data on the dark web, said Europol.

https://kyc360.com/news/professional-fraudsters-arrested-bogus-shops-eur8-million-scam/

CONVICTED FELON ARRESTED IN LA AFTER POLICE SEIZE 553 ILLEGALLY-OWNED GUNS

Illicit Trade on 20^th June reported that police in Los Angeles have discovered a massive haul of 553 illegally-owned firearms inside the home of a convicted felon after receiving information from one of his neighbours.

https://www.illicit-trade.com/2018/06/convicted-felon-arrested-in-la-after-police-seize-553-illegally-owned-guns/?utm_source=dlvr.it&utm_medium=twitter

FORMER ANGLO IRISH BANK BOSS JAILED FOR 6 YEARS FOR FRAUD

Sky News on 20^th June reported that David Drumm, 51, former chief executive of Anglo Irish Bank has been jailed for 6 years for inflating the failing bank’s balance sheet.  He was convicted earlier this month by a Dublin court of conspiracy to defraud and false accounting.  Drumm acknowledged the “huge error in judgement” in arranging the transfer of €7.2 billion to inflate the imploding bank’s balance sheet in 2008.  A crisis of confidence and the bank’s multibillion euro bailout forced Dublin to take a €85 billion rescue package from the IMF and EU.

https://news.sky.com/story/former-anglo-irish-bank-boss-jailed-for-six-years-for-fraud-11411334?src=ilaw

FOUNDER OF FRAUD INVESTIGATION COMPANY JAILED FOR TAX FRAUD

On 20^th June, the Insurance Times reported that Rod Bond (with others), founder and a former director of Ravenstone, which offered fraud investigation and other reports.  He left the business in 2009.  He was jailed for submitting false tax returns and claiming £2 million in tax rebates.

https://www.insurancetimes.co.uk/1427466.article?src=ilaw

COMMUNICATIONS ‘EXPLOSION’ HAMPERING DISCLOSURE, SAYS SENIOR JUDGE

The Law Society Gazette on 20^th June reported that a senior Court of Appeal judge has said that an ‘explosion’ of electronic communications is stretching prosecution and defence resources to or beyond their limits.  He gave as examples 2 rape cases –

• in one it took 630 hours for the police disclosure team to review the content of the 3 complainants’ mobile phones and Facebook accounts, without taking into account the time taken to actually download the phones at the lab, or the time taken to collate, review and schedule the products of the various reviews.
• in the other, where the complainant and defendant met on the dating app Tinder, 150 officer hours were required to examine 20,000 items of data – despite there being only 2 mobile phones to consider.

https://www.lawgazette.co.uk/law/communications-explosion-hampering-disclosure-/5066551.article

SEC JUST FROZE THE ACCOUNTS OF AN ICO FOR A SECOND TIME

Coindesk on 20^th June reported that the SEC has taken action against a co-founder of the PlexCoin cryptocurrency project, having previously sued him for securities violations and fraud in 2017.  On June 15^th, the SEC obtained an emergency court order to freeze the assets of Dominic Lacroix.  PlexCorp was believed to have raised $15 million from thousands of investors through the ICO.  The SEC alleges that Lacroix has been tapping into funds raised since the previous freeze.  Lacroix’s has also been given a 2-month jail sentence and his company $100,000 in fines for contempt of court.

https://www.coindesk.com/the-sec-is-again-freezing-the-assets-of-a-plexcoin-founder/

FBI 2017 INTERNET CRIME REPORT

On 20^th June, Alston & Bird published an article about the 2017 report that highlights trends and statistics compiled by the FBI’s Internet Crime Complaint Center (IC3) during 2017.  There were 301,580 complaints which reported losses of over $1.4 billion.  The report mentions 5 “hot topics” from 2017: business email compromise (BEC), ransomware, tech support fraud, extortion, and the Justice Department’s Elder Justice Initiative.  The article explains what IC3 has to say about each of the 5 trends.

https://www.alstonprivacy.com/fbi-publishes-its-2017-internet-crime-report/

The report itself is available at –

https://pdf.ic3.gov/2017_IC3Report.pdf

CANADA SENATE APPROVES BILL TO LEGALISE RECREATIONAL MARIJUANA

On 20^th June, Jurist reported that under the eventual Act the federal and provincial governments will regulate cannabis, with the federal government licensing dealers.  It will still be illegal for anyone under the age of 18 to use recreational marijuana and it also remains illegal to possess more than 30 grams of dried cannabis in public.

http://www.jurist.org/paperchase/2018/06/canada-senate-approves-bill-to-legalize-recreational-marijuana.php

COMPANY ENTITLED TO DAMAGES DESPITE AFFIRMING CONTRACT IN BRIBERY CASE

Out-Law on 20^th June published an article which said that a company was entitled to bring a claim for damages against a contractor which had paid bribes to its former managing director, regardless of whether it had affirmed its commercial relationship with the briber after the bribery came to light.  The defendant had sought to argue that affirmation of the contract by the claimant was enough to break the chain of causation altogether, meaning that it was not entitled to damages at all.  This argument was rejected by the judge, who confirmed that right to damages operated independently of whether the contract stood.  The claimant became aware of the payments in October 2015, the report says.  However, it decided to carry on in “business as usual” until 30^th June 2016 and the judge found that, by doing so, it had affirmed the contract, and that its decision to end the business relationship in June 2016 was therefore a repudiatory breach of contract.

https://www.out-law.com/en/articles/2018/june/company-entitled-to-damages-despite-affirming-contract-in-bribery-case/

TRUMP’S BORDER POLICIES “STRENGTHEN ORGANISED CRIME”

Insight Crime on 20^th June carried an article explaining how the author considered that while the Trump Administration’s stated purpose of “zero tolerance” of illegal immigration on US borders is intended to lower crime rates, research shows that the net effect may be the opposite.  The policy is to prosecute all those who cross the border illegally.  The so-called zero tolerance approach is supposed to act as a deterrent.  The article says that the policy is, however, shortsighted, in part because research shows that it may, in the long run, strengthen criminal groups.  It then goes on to detail 5 reasons why the policy is counter-productive.

https://www.insightcrime.org/news/analysis/trumps-border-policies-strengthen-organized-crime-heres/

On 20^th June, OCCRP published an article saying that 2 years after the original Panama Papers leaks, the German daily Süddeutsche Zeitung has received a fresh trove of leaked documents from Mossack Fonseca, the now-defunct Panamanian law firm.  The new leak consists of 1.2 million documents which mostly cover the years 2016 and 2017.  OCCRP says that the resulting investigation of these new documents has enabled journalists to tie many loose ends, to uncover even more wrongdoing, and to reveal new twists and turns in what was once a hermetically closed world of offshore dealings.

https://www.occrp.org/en/panamapapers/

On 20^th June, Eversheds Sutherland provided an update on the Blocking Regulation designed to protect EU companies from the extra-territorial effects of US sanctions on Iran. Amongst other things it makes it illegal for EU companies to comply with certain prohibitions in US sanctions legislation.  It is for the EU Member States to decide what penalties are to be imposed for breaches of the relevant provisions and, for the most part, Member States have declined to engage in any enforcement activities.  Updates are intended to deal with the re-imposition of Iran sanctions by the US following the US withdrawal from the JCPOA.  The briefing provides details of changes made and concludes by saying that the European Parliament and the Council now have a period of 2 months to object to the Proposal before it is adopted as EU law (although they may choose to signal earlier that they will not object, thus allowing the measure to come into force earlier).  The Commission hopes that the updated Blocking Regulation will come into force before 7^th August, when the first set of US secondary sanctions on Iran are due to be re-imposed.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Competition_EU_and_Regulatory/updates-to-eu-blocking-regulation-200618

On 20^th June, the above Act was added to the Isle of Man Government legislation website.  It received Royal Assent on 19^th June.  It introduces new AML requirements relating to unregulated trustees, foundations and other matters.  These amendments are being proposed principally in response to recommendations made by MONEYVAL.  The amendments include those concerned with unregulated trustees and foreign trustees not resident in the Isle of Man; the criminal jurisdiction relating to certain offences; penalties for failing to comply with a requirement to produce information to a competent authority; record- keeping requirements for foundations; and powers of the Registrar of concerning information submitted by, or required from, companies, partnerships, LLC and foundations.

https://legislation.gov.im/cms/images/LEGISLATION/PRINCIPAL/2018/2018-0011/Anti-MoneyLaunderingandOtherFinancialCrimeMiscellaneousAmendmentsAct2018_1.pdf

In the latest TRACE podcast, Judd Hesselroth and Alexandra debate the merits of the ISO anti-bribery standard and the associated accreditation process.

https://www.traceinternational.org/bribe_swindle_or_steal

 

A Europol news release on 20^th June reported that the new EU Terrorism Situation and Trend Report describes terrorist incidents and activities on European soil.  9 EU Member States reported a total of 205 foiled, failed and completed terrorist attacks in 2017 (2016: 142).  This is a 45% increase compared to 2016 and a shift from a downward trend that started in 2014.  975 individuals were arrested in the EU for terrorism-related offences and most of these arrests were related to jihadist terrorism, for suspicion of participating in activities of a terrorist group; planning and preparing attacks; and facilitation activities such as dissemination of propaganda, recruitment and financing of terrorism.  In the section on the financing of terrorism, from page 11, the report notes –

• One major investigation focused on a large network of Lebanese nationals offering money laundering services to organised crime groups in the EU and using a share of the profits to finance terrorism-related activities of the Lebanese Hezbollah’s military wing. The co-operation of these money launderers and Hezbollah’s military wing was a clear example of a nexus between organised crime and terrorism.
• Another investigation uncovered the mechanism used by foreign terrorist fighters (FTF) to obtain financial support from their families in Europe through a network of facilitators and money collectors, the FTF being in Syria, Iraq and Libya.
• The cases of financing of terrorism together illustrate the diverse methods that the financing of terrorism may employ, from very basic to highly complex schemes.
• In terrorism financing, cash transactions, in which couriers may be used, and unregulated and illegal financial networks take a prominent role.
• Many prominent hawala operators are based in the UAE, which frequently serves as the international platform for illicit finance activities. Money being transferred via the hawala system generally moves from – and not to – the EU, and It is probable that hawala is used more often by support networks that send money to terrorist organisations abroad than for plotting attacks within the EU.
• Diaspora communities living in the EU play a significant role in financing and procurement activities for conflicts in their countries of origin.
• Calls for donations are made in mosques, via websites and web for a; and non-profit organisations (NPO) may be used for money laundering and terrorism financing under the umbrella of humanitarian activities.
• The Partiya Karkeren Kurdistan (PKK, Kurdistan Workers’ Party) is known to systematically and, if need be, forcibly collect funds in the EU to finance its activities; it also uses front organisations and charities in the EU for this purpose and is suspected of being involved in criminal activities.
• Kidnapping remains a high-profile form of jihadist terrorism impacting on foreign nationals overseas.
• Most terrorist activities with which the EU was confronted in recent years, irrespective of affiliation, were inexpensive and did not require external sources of funding.
• In addition to licit employment incomes, state subsidies and social benefits, funds provided from like-minded individuals within the community are the main sources of income.
• Dissident Republicans in Northern Ireland are associated with both minor and serious criminality, including drug dealing, extortion and fuel laundering.
• Anarchist and right-wing extremist groups are mainly financed by their members through contributions and fundraising events.
• Members of the anarchist and left-wing extremist milieus have been found to sometimes revert to crime (robberies of banks and supermarkets).
• Virtual currencies, among which Bitcoin is the most well-known, have gained popularity, but the expansion of use among terrorist organisations, however, seems to be slow and has not yet matched the use made of them by organised crime groups, especially those involved in cybercrime.

https://www.europol.europa.eu/newsroom/news/terrorist-threat-in-eu-remains-high-despite-decline-of-in-iraq-and-syria

 

On 20^th June, the European Sanctions Blog reported that Theresa May has said that she would be pushing for enhanced EU sanctions against Russia at the next meeting of EU leaders.

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2018-06-06/150627/

On 19^th June, The American interest carried an interesting and informative article – strongly recommended to provide a historical context to the current situation of the US in AML matters – which starts by saying that for decades, the US has been one of the leading destination havens for wealthy individual offshore investors; and that despite record corporate profits, soaring inequality, and high debt levels, the US is on the verge of the US becoming the largest tax haven in history.  It notes that the most striking omission from the recent EU blacklist was the US.  It then notes that, as of 1960, there were only about a dozen secrecy havens that really counted, mainly in Europe and the Western Hemisphere. As of 2018 there are more than a hundred “conduit and destination” havens, in every time zone.  The article claims that only in the arenas of law enforcement and national security is the US somewhat “disadvantaged” when it comes to attracting dodgy money.  It says that the US has been a technical “tax haven” of sorts since the early 1920s, when it first introduced zero taxes on the interest income earned by “non-residents aliens” on their U.S. bank deposits though few foreigners bothered to take advantage of this rule.  The first large-scale inflows into the US arrived in the late 1960s and early 1970s from Latin American drug cartels – as a result, the US Treasury then implemented stricter rules for currency deposits in banks, but these remained loosely enforced until the 1980s.  Then, in the mid-1980s, the first surge in flight capital inflows to US banks appeared, mainly from heavily indebted developing countries like Mexico, Venezuela, Argentina, Brazil, Nigeria, and the Philippines; and the favourable tax benefits enjoyed by NRA who bring their financial and human capital to the US have expand dramatically since the 1980s.  The article claims that cross-border investors are finding that when it comes to secrecy and asset protection, it is hard to do better than LLC or trusts provided by “onshore” states like Delaware, Nevada, Wyoming, and South Dakota, especially when it comes to buying US real estate – this trend beginning with Wyoming’s pioneering creation of “limited liability companies” (LLC) in 1977 though by the late 1990s LLC were available from all 50 U.S. states.  However, it notes that the US Treasury and Congress have to date opposed public registration of ultimate beneficial ownership for companies, LLC, and trusts and they have declined to support reciprocal information exchange with all other OECD members, let alone the Tax Global Forum or the world at large.  The article concludes by saying that if any jurisdiction in the world deserves to be “blacklisted,” by the EU or anyone else, it is the US.

DRAMATIC RISE IN US SAR 1996-2015

https://www.the-american-interest.com/2018/06/18/the-worlds-largest-tax-haven-guess-who/

Modern Ghana on 20^th June reported that authorities in Nigeria say they will close their border with an unnamed neighbouring country within the next few days to stop foreign rice being smuggled in.  “Poisonous materials” and “arsenic” are among the substances a minister claims are present in rice imported from China and SE Asia into Africa.  Nigerian authorities have not yet disclosed which neighbouring country the smuggled rice is coming from, local media say the country in question is Benin.

https://www.modernghana.com/news/862188/nigeria-to-shut-border-over-poisonous-rice.html

However, the Independent in Nigeria claimed the neighbour affected was Cameroon, in a report on the seizure by the Navy of a ship smuggling rice – the vessel carrying 2,860 bags of foreign rice.

https://independent.ng/navy-impounds-ship-with-smuggled-rice-in-calabar/