Day: July 9, 2018

9^th July 2018

CAYMAN ISLANDS: SUSPICIOUS FINANCE REPORTS SKYROCKET

On 8^th July, the Cayman Compass reported that an unusually large number of suspicious activity reports were filed with the Cayman Islands Financial Reporting Authority during the last half of 2017.  There were 563 reports filed between July 1^st and December 31^st, only slightly less than was reported during the previous 12 months.  Suspected tax evasion was the most common reason for entities making SAR at 33%.  Suspected fraud was reported in 102 cases, there were 28 cases of suspected money laundering (5%) and suspected drug trafficking or terrorism-related financing made up about 1% of all reports.

https://www.caymancompass.com/2018/07/08/suspicious-finance-reports-skyrocket/

GARDAÍ BELIEVE A DUBLIN TANNING BED SALON IS BEING USED TO WASH HEROIN MONEY

The Journal in Ireland on 9^th July reported that police and tax authorities are investigating a small Dublin tanning shop as they probe an alleged link to money laundering and drug dealing.  It has, this year, turned over what sources say is an ‘inordinate sum of money for a relatively small business’.  The shop has been bringing in around €1,500 per day on average – meaning it needs 155 customers every single day for 6 months to sustain that amount of cash.

http://www.thejournal.ie/garda-tanning-bed-4111739-Jul2018/

 

SUPERCAR FRAUDSTER JAILED

The Stratford Observer on 9^th July reported that a fraudster has been jailed for scamming customers out of nearly £250,000 when he promised to order supercars.  Nicholas O’Neil, 47, of Idlicote-based Drive Direct was jailed for 5½ years for defrauding unsuspecting customers by promising to order cars such as Ferraris, Bentleys and Porsches.  He worked closely with David Chandler, 49, who ran Kis Cars in Hertfordshire. Chandler’s part in the scheme saw victims conned out of another £91,000, taking the total between the pair to some £340,000.  The men were both from New Zealand, knew each other well and plotted a scheme to extract money from car dealers and buyers who had approached them wanting to purchase top-of the range super cars.

https://stratfordobserver.co.uk/news/shipston-supercar-fraudster-jailed/

PODCAST: VAT FRAUD BY SELLERS ON AMAZON

This 30-minute podcast from 6^th July consists of a discussion with Richard Allen of RAVAS (Retailers Against VAT Abuse), who began by running an online mail order business and when he started sales were made directly, rather than through websites such as Amazon.  He says that VAT fiddles began to appear in 2003 people started suffering from problems with VAT when the Channel Islands started exploiting a VAT loophole, and then supplies from China began exploiting loopholes.

http://sellersessions.com/vat-fraud-by-sellers-on-amazon/

http://www.ravas.org.uk/

CHINA SET TO IMPOSE TOTAL BAN ON WASTE IMPORTS BY 2020

Loadstar on 9^th July reported that China at the beginning of 2018 introduced a partial ban on waste imports – seeking to tackle its air pollution problem – which is said to have possibly affected as much as 5 million teu of global box traffic, and according to Recycling Today, it is now intent on a complete ban by 2020.

https://theloadstar.co.uk/china-government-set-total-ban-scrap-imports/

BRIEFING: JERSEY’S LLC

A briefing from law firm Ogier on 6^th July is intended to provide a summary of the main legal requirements and general principles applicable to the establishment and operation of a Jersey Limited Liability Company (LLC), formed under the Limited Liability Companies (Jersey) Law 2018.

https://www.ogier.com/publications/jersey-limited-liability-companies

PODCAST: SPOTLIGHT ON CANADA

In the latest TRACE podcast about the world of financial crime – corruption, fraud, money laundering and sanctions, James Klotz with TRACE’s partner firm, Miller Thomson, discusses anti-bribery efforts in Canada, the patchy enforcement of the Corruption of Foreign Public Officials Act (CFPOA) and last year’s repeal of the facilitation payment exception.

https://www.traceinternational.org/bribe_swindle_or_steal

EX-BDO JERSEY DIRECTOR JAILED FOR £2.6 MILLION FRAUD

Accountancy Daily on 9^th July carried a report saying that Richard Arthur, a former managing director with BDO in Jersey has been jailed for defrauding clients of £2.6 million, with the court told he used the money to fund an ‘extravagant lifestyle’ which included buying a Formula 1 racing car and paying off debts relating to companies in which he had invested.

https://www.accountancydaily.co/ex-bdo-jersey-director-ps26m-fraud

GENUINE CIGARETTES SMUGGLED FROM ALGERIA GIVES EU ANOTHER HEADACHE

EurActiv on 9^th July reported that the increasing flow of genuine cigarettes from Algeria into Europe is giving politicians a fresh headache.  A report has found increasing flows from Maghreb countries toward France, and the political instability in the region makes it difficult to establish the real final destination of these cigarettes, OLAF admits.  Flows from Algeria to France have increased 300% since 2012 and accounted for more than 31% of total flows into France in 2016, with the majority of products identified as Marlboro.

https://www.euractiv.com/section/economy-jobs/news/genuine-cigarettes-smuggling-from-algeria-gives-brussels-another-headache/

EGYPT ARRESTS CUSTOMS CHIEF OVER ALLEGED BRIBES

Arab News on 9^th July reported that Gamal Abdelazim “obtained bribes… in exchange for the smuggling of goods prohibited for import and without payment of required customs duties,” according to the administrative control authority tasked with tracking graft.  He was also accused of asking workers to “prepare false reports in order to reduce the fines on seized goods”.

http://www.arabnews.com/node/1335906/middle-east

SRI LANKA COURT TO HEAR AVANT GARDE FLOATING ARMOURY CASE AGAINST FORMER DEFENCE SECRETARY ON OCTOBER 30^TH

The Colombo Page in Sri Lanka on 9^th July reported that the Colombo Magistrate Court has decided to postpone the case filed by the Bribery Commission against Gotabhaya Rajapaksa and 8 other suspects in the Avant Garde floating armoury case.  The Bribery Commission has filed charges against the defendants accusing them of causing a financial loss to the Government by paving the way for the operation of a floating armoury by the Avant Garde Maritime Services.  The armoury was for use of those companies providing anti-piracy maritime security protection in the Indian Ocean area.  Former defence officials involved include the former navy commanders Somathilaka Dissanayake, Jayanath Colombage and Jayantha Perera.  Sujatha Damayanthie, a former Additional Secretary to the Defense Ministry, is also a suspect, it says, but has left the country.

http://www.colombopage.com/archive_18B/Jul09_1531151008CH.php?src=ilaw

 SWITZERLAND VOWS TO RETURN STOLEN ASSETS TO KENYA

AA.com in Turkey on 9^th July reported that Switzerland and Kenya have signed an MoU for the return of illegally acquired assets and money stolen from Kenya through illegal, corrupt means.  Switzerland will also support Kenya’s war on corruption following the recent alleged theft of $100 million from the National Youth Service.

https://www.aa.com.tr/en/africa/switzerland-vows-to-return-stolen-assets-to-kenya/1198877

GERMANY DELAYS IRANIAN FUNDS REPATRIATION AHEAD OF US SANCTIONS

DEBKA File on 9^th July reported that a finance ministry spokesperson has said that the European-Iranian Trade Bank’s repatriation of €300 million to Iran, to avoid the US sanctions squeeze, had been delayed.  It is said to be subject to a review by the Bafin markets regulator and the customs agency’s FIU,  which scrutinizes transactions AML/CFT purposes.  The delay may hamper efforts to repatriate the funds before renewed US sanctions take effect.

https://www.debka.com/mivzak/germany-delays-iranian-funds-repatriation-ahead-of-us-sanctions/?src=ilaw

WESTERN BALKANS NATIONS PLEDGE TO SHARE INFORMATION BETTER IN THE FIGHT AGAINST SERIOUS AND ORGANISED CRIME AND TERRORISM

On 9^th July, the Ministers of Interior and security of the 6 Western Balkan countries signed a declaration in London pledging to share with one another law enforcement and counter-terrorism information in a “legal, timely, proactive, secure, high-quality, efficient and effective” manner.

https://www.gov.uk/government/publications/joint-declaration-on-the-principles-of-information-exchange-in-the-field-of-law-enforcement

UNIQUE CHALLENGES MAKES BIOSECURITY A TOP PRIORITY FOR NEW ZEALAND

On 5^th July, Homeland Security Today in the US published an article focusing on how New Zealand’s heavy reliance on agriculture, aquaculture and international trade make biosecurity a priority.  A government minister is quoted as saying that protecting against biothreats is as big of a concern as other threats to national security, and it is one of the country’s top 5 risks.  The article mentions that 12,000 passengers were issued with infringement notices last year after they were found to have undeclared biosecurity-risk goods, and that shipping containers entering New Zealand’s ports have also been steadily increasing, and foreign stowaways such as seeds or stinkbugs pose unique risks.

https://www.hstoday.us/subject-matter-areas/pandemic-biohazard/unique-challenges-makes-biosecurity-a-top-priority-for-new-zealand/

ARGENTINA: FIRST CONVICTION OF AN UNAUTHORISED ONLINE GAMBLING OPERATOR,

Calvin Ayre on 9^th July reported that, in what local prosecutors hope is the first of many such actions, a man has been sentenced to 3 years in prison for his role in operating multiple online gambling sites linked to the Miljugadas brand.

https://calvinayre.com/2018/07/09/business/argentina-online-gambling-operator-gets-three-year-sentence/

IRISH CUSTOMS SEIZES CANNABIS-INFUSED ‘JELLY SWEETS’, HERBAL CANNABIS AND CONTRABAND CIGARETTES

On 9^th July, the Irish Revenue Commissioners released a news release saying that in 3 separate operations Revenue officers seized 2 kg of cannabis-infused ‘jelly sweets’, 650g of herbal cannabis and 50,000 contraband cigarettes.  The jelly sweets were discovered, with the assistance of a detector dog Stella, in a parcel from the US declared as ‘beauty products’.

https://www.revenue.ie/en/corporate/press-office/press-releases/2018/pr-090718-revenue-seize-cannabis-infused-jelly-sweets-and-herbal-cannabis.aspx

 

Defense News on 6^th July carried a report about Danske Bank, Denmark’s leading financial services group, being under investigation by Danish authorities for multiple cases of money laundering through its Talinn-based branch, Danske Bank Estonia (DBE), between 2007 to 2015.  Denmark’s Financial Supervisory Authority (FSA) will also examine reports that money laundered through DBE was used to finance weapons deals between North Korea and Iran in 2009.  investigators are said to be examining money laundered through DBE and one such inquiry includes the shipment by aircraft of 35 tons of missiles, grenades and other military materials between North Korea and Iran in December 2009, which investigators suspect was funded from cash laundered through DBE by Russian state officials, working with organised crime groups.

https://www.defensenews.com/global/europe/2018/07/06/danske-bank-investigation-could-uncover-ties-to-north-korea-and-iran/

On 9^th July, a news release advised that the Security Council 1718 Sanctions Committee had amended the entries for Hong-Sop Ri, and the Munitions Industry Department (MID).  The amendments say that the MID oversees the DPRK’s nuclear programme, and that the Nuclear Weapons Institute Of which Hong-Sop Ri is the Head) is subordinate to the MID.

https://www.un.org/press/en/2018/sc13413.doc.htm

Corker Bining on 9^th July published a briefing that says that the judgment of the Court of Appeal in R v Hayes is a stark and unsettling reminder of how occasionally a family court and a criminal court may deliver contradictory judgments on the same facts.  The case concerned a house in Surrey which a Mr and Mrs Hayes purchased it for £1.2 million in late 2011.  It was transferred into their joint names and they both made a declaration of trust stating that they held it as joint tenants.  The article compares the treatment that would have applied in the event of a divorce, and that in confiscation proceedings following Mt Hayes’ conviction – with the prosecution attempting to show the house was a “tainted gift”.

https://www.corkerbinning.com/stand-by-your-man-the-clash-of-criminal-law-and-family-law-concerning-inter-spousal-transfers-of-assets/

On 9^th July, OFAC added MAHAN TRAVEL AND TOURISM SDN BHD (aka MAHAN TRAVEL) to its SDN lists because of its links to already-designated Mahan Air.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20180709.aspx

On 6^th July, in the first of 2 reports on maritime container security, Homeland Security Today interviewed Dan Stajcar, director of the Container Security Initiative Division at US Customs and Border Protection, to find out more about the programme and its impact at home and overseas.  CSI was announced in January 2002 and is part of CBP’s layered cargo enforcement strategy.  Before 9/11 there was no CSI and no programme that required inspection of high-risk containers before they left the ports of embarkation or trans-shipment.  Under CSI, CBP assesses the risk of every maritime containerised cargo shipment before it is loaded on a vessel destined for the US.

https://www.hstoday.us/federal-pages/dhs/cbp/hstindepth-cbp-container-division-screens-for-threats-before-they-reach-home-soil/

On 9^th July, the House of Commons Library produced a briefing paper on 3 consultation exercises undertaken by the Department of Business, Enterprise and Industrial Strategy.  The first closed in July 2016 and the Government published its responses in September 2016.  In March 2018, a second consultation sought views on new proposals to improve the governance of companies when they are in, or approaching, insolvency – this consultation closed in June and a Government response is awaited.  Finally, in April 2018, HMRC published a discussion paper on tax abuse and insolvency, and the deadline for response to that was 20^th June.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8291

An article on KYC 360 on 8^th July saying that French cement giant Lafarge finds itself at the core of a rather unique, and quite embarrassing, compliance case.  How, the article asks, will it untangle itself out of this mess and says it will be an interesting one to watch.  The case, in France, is said to be the first time  non-profit organisations have filed suit against a multinational corporation for financing terrorist activity and complicity in war crimes and crimes against humanity.  It was alleged that Lafarge subsidiary, Lafarge Cement Syria (LCS), entered into deals with ISIS to protect the interests of its cement factory in the north of Syria.  Lafarge agents reportedly paid out over $5 million to armed groups, although other reports say up to €13 million was paid out.

https://kyc360.com/article/lafarge-terror-financing-scandal-choosing-making-cash-keeping-compliance/

On 9^th July, the EU 5^th AML Directive entered into force, and the EU produced a factsheet explaining the main details and effects of the new Directive.  Its provisions have to implemented by Member States in their national legislation by 10^th January 2020.

http://ec.europa.eu/newsroom/just/document.cfm?action=display&doc_id=48935

Documents considered by the House of Commons EU Scrutiny Committee on 27^th June include a proposed Directive laying down rules facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences and repealing Council Decision 2000/642/JHA.  The report on the Committee’s considerations says that the EU Commission considers that existing mechanisms for accessing and exchanging financial information within the EU are too slow, given the pace at which funds can be moved across borders and the new Directive is intended to improve access to financial information for law enforcement purposes.  It would –

• give designated national law enforcement authorities and Asset Recovery Offices direct access to bank account information held in their Member State’s central bank account registries (or electronic data retrieval systems) where necessary to prevent, detect, investigate or prosecute a serious criminal offence;
• strengthen the exchange of financial information and analysis between their own designated national law enforcement authorities and FIU as well as between FIU in different Member States;
• introduce a 3-day time limit for the exchange of information between FIU in different Member States (24 hours in “exceptional and urgent cases”); and
• give Europol indirect access to bank account and other financial information or analysis via each Member State’s National Europol Unit.

The EU Commission is said to envisage that the proposed Directive would have to be implemented in domestic law at the same time as the provisions of the recently-agreed 5^th AML Directive which requires Member States to establish central bank registries or electronic data retrieval systems so that account holders can be readily identified. This is likely to be in early 2020, so would be during the post-Brexit withdrawal transition period.  As the proposed Directive is a criminal law measure it will only apply to the UK if the Government decides to opt in.

The Directive remains under scrutiny.

https://publications.parliament.uk/pa/cm201719/cmselect/cmeuleg/301-xxxii/30109.htm#_idTextAnchor021