OUTCOMES OF THE FATF PLENARY

On 29th June, FATF published details of the outcomes of the Plenary held in Paris, 27th to 29th June.  These include –

  • a final report, “Anti-money laundering and counter terrorist financing for judges and prosecutors”, which highlights the relevant underlying and supporting elements of the wider AML/CFT regime. It also provides good practices in the investigation, prosecution and conviction for both money laundering and terrorist financing; confiscation; and mutual legal assistance, extradition & other co-operation;
  • adopted a joint FATF-APG report which analyses the financial flows associated with the fast-growing crime of human trafficking, both as a money laundering predicate and potential source of terrorist financing, updating the FATF’s 2011 Human Trafficking report. The report provides good practices and indicators specific to the type of human trafficking as specified in the Palermo Protocol: human trafficking for forced labour, sexual exploitation or for the removal of organs.  The report also responds to a call from the UN Security Council for the FATF to consider the links between human trafficking and terrorist financing;
  • beneficial ownership: adopted a joint FATF-Egmont Group study that looks at the mechanisms and techniques that can be used to obscure the ownership and control of illicitly obtained assets, drawing on over 100 case studies, the experiences of law enforcement experts, the outcomes of FATF Mutual Evaluation Reports, and the insights provided by academic reports and other studies. The report aims to raise awareness with national authorities, financial institutions and other professional service providers about the risks involved;
  • adopted a report which aims to assist authorities to target professional money launderers (PML), as well as the structures that they utilise to launder funds, in order to disrupt and dismantle the groups that are involved in proceeds-generating illicit activity so that crime does not pay;
  • considered Brazil’s progress in addressing the deficiencies identified in its mutual evaluation report. Recognising that Brazil has taken further steps to improve its counter terrorist financing regime, deficiencies nevertheless remain regarding targeted financial sanctions and Brazil has failed to meet the deadlines in the action plan it agreed to.  As such, this is now a membership issue for the FATF to consider in February 2019 and Brazil is encouraged to address those deficiencies as soon as possible;
  • FATF maintains its February 2018 public documents which identify jurisdictions that may pose a risk to the international financial system (including the grey listing of Pakistan, see below);
  • FATF has identified Pakistan as a jurisdiction with strategic AML/CFT deficiencies. The country has developed an action plan with the FATF to address the most serious deficiencies and FATF welcomed the high level political commitment of Pakistan to their action plan;
  • Iraq and Vanuatu will no longer be subject to the FATF’s monitoring under its on-going global AML/CFT compliance process;
  • whilst disappointed with Iran’s failure to implement its action plan to address its significant AML/CFT deficiencies, given the Iranian government’s continued efforts to finalise and pass amendments to its AML and CFT laws, FATF decided to continue the suspension of counter-measures for Iran;
  • delegates discussed 2 draft risk-based approach guidance papers for the insurance and securities sectors. These papers will be released for public consultation following the Plenary. The finalised reports, which will take into account the feedback received during the public consultation, will be adopted by the FATF Plenary in October 2018; and
  • FATF will hold an inter-sessional meeting in September on how the FATF Standards apply to virtual currencies/crypto-assets.

http://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-plenary-june-2018.html

5 COUNTRIES’ TAX OFFICES JOIN FORCES TO FIGHT FINANCIAL CRIME

Baker McKenzie on 29th June reported that tax authorities from the US, UK, Canada, Australia, and the Netherlands have created an international enforcement group to fight crime and speed up responses to financial data dumps like the Panama Papers.  The Joint Chiefs of Global Tax Enforcement, was announced June 28th.  The group will share data, intelligence, technology and methods, “pilot new initiatives,” and conduct joint operations.

http://www.riskandcompliancehub.com/five-countries-tax-offices-join-forces-to-fight-financial-crime/

https://www.cbc.ca/news/politics/tax-crimes-j5-alliance-1.4726645

LAFARGE SA UNDER INVESTIGATION IN RELATION TO PAYMENTS ALLEGEDLY MADE TO ENSURE THAT ITS JALABIYA CEMENT PLANT IN SYRIA CONTINUED TO OPERATE

The European Sanctions Blog on 29th June reported that the French company had been placed under formal investigation by examining magistrates re payments allegedly made between 2011 and 2014 to sanctioned militant groups, including ISIS, to ensure that its Jalabiya cement plant in Syria continued to operate (the plant had been operated by Lafarge Cement Syria, a subsidiary of Lafarge SA).  The ultimate parent company, Lafarge Holcim, describes itself as the leading global building materials and solutions company serving masons, builders, architects and engineers all over the world. Group operations produce cement, aggregates and ready-mix concrete and employs approximately 80,000 employees in around 80 countries.

https://europeansanctions.com/

The statement from the company is at –

https://www.lafargeholcim.com/lafarge-sa-investigation-france

ISLE OF MAN SUBMISSION TO UK PARLIAMENTARY INQUIRIES

On 29th June, the Isle of Man Government published the submission it had made to UK Parliamentary inquiries – into tax avoidance and evasion and into economic crime.  The submission details the work done in addressing AML/CFT and proliferation financing issues.

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https://www.gov.im/news/2018/jun/29/island-responds-to-uk-parliamentary-inquiries/

US REPORT: ‘WORST HUMAN TRAFFICKERS’ INCLUDE RUSSIA, BELARUS, IRAN, TURKMENISTAN

Rferl on 28th June reported that a US State Department report says that Belarus, Iran, Russia, and Turkmenistan remain among the worst offenders of human trafficking and forced labour.  The report evaluates 187 countries and territories and ranks them into 4 tiers (Tier 1, Tier 2, Tier 2 Watch List, and Tier 3), with Tier 1 being the best and Tier 3 the worst.  Russia, Belarus, Iran, and Turkmenistan were among 22 countries ranked as Tier 3; others included Burma/Myanmar, China, North Korea, Syria, and Venezuela.  The report also listed 43 countries in danger of being downgraded to Tier 3 in future years – the Tier 2 Watch List includes Bosnia-Herzegovina, Kyrgyzstan, Montenegro, Tajikistan, and Uzbekistan, along with EU member state Hungary.

https://www.rferl.org/a/russia-belarus-iran-turkmenistan-human-traffickers-report/29326302.html

The “Trafficking in Persons Report” of June 2018 is available at –

https://www.state.gov/documents/organization/282798.pdf

Bear in mind that the US has laws banning the import of goods made using forced or slave labour.

TRANSNATIONAL SEX TRAFFICKING RINGS CASH IN ON VENEZUELA CRISIS

Insight Crime on 28th June carried a feature saying that authorities in Spain and Venezuela have arrested members of 2 different transnational networks sexually exploiting women and girls fleeing Venezuela’s political and economic crises.

https://www.insightcrime.org/news/brief/transnational-sex-trafficking-rings-cash-venezuela-crisis/

ALLEN & OVERY EUROPEAN WHITE COLLAR CRIME REPORT Q1 2018

In the latest edition of the law firm’s review, Allen & Overy  –

  • identifies an increasing trend by national courts across a number of jurisdictions, particularly France and Italy, to apply extraterritorial jurisdiction to a number of criminal offences committed by corporates;
  • the increasing use of Deferred Prosecution Agreements and similar tools – most notably in France but now potentially in Germany;
  • the long-awaited first contested trial for corporate failure to prevent bribery;
  • progress on the 5th Money Laundering Directive, even while 4th Directive continues to be implemented in a small number of jurisdictions;
  • the extra-territorial reach of French AML laws in French carbon tax scam litigation;
  • the German FIU reportedly faces administrative challenges following reorganisation;
  • in Spain, the proceeds of tobacco smuggling are deemed not illicit, because where smuggling leads to profits of less than €150,000, such activities are deemed in Spain to be administratively illegal, not criminal;
  • in the UK, the JMLSG publishes updated guidance On AML/CFT in asset finance and syndicated lending;
  • success in acting to reinstate Romania’s best-known anti-corruption magistrate.

It details the status of the implementation of the 4th Money Laundering Directive in the Member States.

http://www.allenovery.com/SiteCollectionDocuments/7248636-v1-Allen_Overy_European_White_Collar_Crime_Report_Q1_2018.PDF