11th July 2018
US IMPLEMENTS VISA SANCTIONS ON BURMA AND LAOS
Homeland Security Today on 10th July reported that the US Department of Homeland Security and the State Department had imposed visa restrictions on Burma and Laos due to lack of co-operation in accepting their citizens who have been ordered removed the US. The governments are said to have denied or unreasonably delayed accepting their nationals ordered removed from the US. The visa restrictions apply to certain categories of visa applicants and, without an appropriate response from Burma and Laos, the scope of these sanctions may be expanded to a wider section of the populations.
US INDICTS MAN FOR SMUGGLING THOUSANDS OF TURTLES
CBS News on 10th July reported that a US federal grand jury has indicted David Sommers, 62, from Philadelphia for allegedly smuggling more than 3,500 protected turtles. Federal wildlife officials seized more than 3,400 diamondback terrapin hatchlings from Sommers’ home in October and helped return them to their natural habitats in the coastal marshes of New Jersey. Sommers allegedly poached the turtles and their eggs in 2017 and sold them to buyers in New York and Wisconsin, with each transaction totalling more than $350, according to the indictment. He also allegedly smuggled turtles into Canada in 2014 using a package that was falsely said to contain a book. He faces up to 15 years in prison.
TAIWAN AUTHORITIES PROBE ALLEGED SMUGGLING TO NORTH KOREA
The Taipei Times on 11th July reported that the Taipei District Prosecutors’ Office has summoned 19 people, including the owner of a customs brokerage, for questioning as part of a probe into their alleged involvement in selling a chemical used to make gunpowder to North Korea. Ir is alleged that a brokerage owner, Chen, last year started using several Chinese ships to smuggle products to North Korea, including a special sugar that can be processed into gunpowder, as well as grain from SE Asia, to North Korea through Japan and South Korea under the guise of exporting the products to those countries.
SEA CUCUMBERS MEANT TO BE SMUGGLED TO SRI LANKA SEIZED
The Sunday Leader in Sri Lanka reported on 10th July that nearly 400 kg of sea cucumber worth intended for smuggling into Sri Lanka from India had been seized. 58 bags of sea cucumber were confiscated, though the smugglers managed to escape. Considered a great delicacy, sea cucumbers are classified as endangered species and their harvest is banned under the Wildlife Protection Act in India.
NEW EU-VAT SYSTEM FOR THE TRADE IN GOODS BY 2022?
On 10th July, STALFORT in Romania published a useful summary of the proposed changes to the VAT treatment of the movement of goods (n.b. not services) in the EU. It emphasises that the cross-border trade in goods will then be defined as `uniform taxable delivery’, and the delivery of goods within the EU will no longer be exempt from VAT in the state of despatch. It is therefore necessary to ensure that the goods will be taxed in the Member State in which their transport ends, with the output tax (VAT) being forwarded to the state of destination. The purpose of these changes is to cut down on fraud (especially `VAT carousel’ or MTIC fraud) to simplify administration for companies concerned and the recommendations would be put into national legislation by 2022.
US SANCTIONS ON IRAN – WHAT IS COMING?
On 10th July, HFW published an update on US sanctions targeting Russia and Iran. It included a useful summary of the so-called secondary sanctions against Iran and business with Iran from August and November –
From 6th August, sanctions will target –
- the purchase or acquisition of US dollar banknotes by the Iranian government;
- Iran’s trade in gold or precious metals;
- the sale, supply or transfer to or from Iran of graphite, raw or semi-finished metals such as aluminium and steel, coal and software for integrating industrial processes;
- significant transactions related to the purchase or sale of Iranian rials (i.e. its currency) or the maintenance of significant funds or accounts outside Iran denominated in Iranian rial;
- the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt;
- the country’s automotive sector; and
- activities connected to the export or re-export to Iran of commercial passenger aircraft and related parts and services, including those undertaken pursuant to OFAC’s General License.
From 4th November, sanctions will target –
- Iran’s port operators and shipping and shipbuilding sectors;
- Petroleum-related sanctions with among others, the National Iranian Oil Company, affecting the purchase of petroleum, petroleum products of petrochemical products from Iran;
- foreign financial institutions doing business with the Central Bank of Iran (CBI) and designated Iranian financial institutions;
- provision of specialised financial messaging services to the CBI and Iranian financial institutions;
- provision of underwriting services, insurance or re‑insurance; and
- Iran’s energy sector.
These secondary sanctions are, of course, in addition to the ongoing primary sanctions that were unaffected by the JCPOA agreement and prohibiting US persons from participating in business transactions with Iran were (save for limited exceptions).
ALLEGED MALAYSIAN 1MDB MASTERMIND JHO LOW FLEES MACAU FOR MAINLAND CHINA
The South China Morning Post on 11th July reported that the fugitive financier, who faces Interpol warrant for his arrest, believed to have left Macau, and who had earlier skipped Hong Kong, via car or private jet.
IRELAND: CRIMINAL ASSETS BUREAU MAKES COURT APPLICATION TO SELL OFF CARS, PROPERTY, AND JEWELLERY LINKED TO KINAHAN CARTEL
Dublin Live on 11th July reported that the assets include 29 vehicles, a motorcycle, houses in Crumlin and Clondalkin, jewellery and cash.
CYPRIOT NATIONAL SENTENCED TO PRISON FOR DRUGS MONEY LAUNDERING IN US
A DoJ news release on 10th July reported that Esam Sakkal, 40, a Cypriot national, was sentenced to 27 months’ time served and ordered to pay forfeiture of $19, 248. In April 2018, he had pleaded guilty to 1 count of money laundering conspiracy and 2 counts of laundering of monetary instruments. In June 2017, Sakkal and his brother, Nabeel Sakkal, aka Traycho Marinov Mitchov, Nabil Cieckal and Nabil Imadein Bazul Siggal, a dual national of Cyprus and Jordan, were indicted. Nabeel Sakkal remains a fugitive.
$33 MILLION SCAM FOR PLANT HIRE BY THE WATER AUTHORITY OF FIJI
On 11th July, the Fiji Times reported that an alleged $33 million scam for plant hire by the Water Authority of Fiji has been referred to the Fiji Independent Commission Against Corruption (FICAC). The authority was alleged to have hired a digger at a cost of $33 million for a period of 15 months.
WHY THE END OF US SANCTIONS HASN’T HELPED SUDAN
On 11th July, an article from the BBC saying that Sudanese hopes that the lifting of US sanctions will improve their economy have failed to materialise. Instead of regaining its footing, the economy has fallen off a cliff, with inflation soaring and people struggling to get by. A few years ago, there were fewer than 4 Sudanese pounds to the dollar – now it is 29 by the official rate, and over 40 on the black market. Inflation is over 55%, the highest rate for around 2 decades. For years, international banks would not operate in Sudan, and the state and companies were largely unable to get spare parts for things like aeroplanes or vital health equipment. Although this has ended in theory, in practice little seems to have changed.
US UNIT OF SPAIN’S IMAGINA SPORTS MEDIA GROUP PLEADS GUILTY TO BRIBING SOCCER OFFICIALS
Reuters on 11th July reported that a Florida-based unit of the Spanish sports media group Imagina has pleaded guilty to charges of bribing Latin American soccer officials to secure media and marketing rights to qualifying matches for the 2014, 2018 and 2022 World Cups. It was also ordered to pay more than $24 million, the latest penalty imposed in the sprawling US investigation of corruption at FIFA.
A CURIOUS TALE OF THE PRIEST, THE BROKER, THE HACKED NEWSWIRES, AND $100 MILLION OF INSIDER TRADES
The Register on 11th July carried a report about 2 former investment bankers, one of whom is also a priest and a former vice-president at Morgan Stanley, have been found guilty of an elaborate scam – hacking newswires to read press releases prior to publication, and trade millions using this insider information. An indictment says that they colluded 2010-15 with a Ukrainian hacking gang and investors in the US, Russia, France, and Cyprus to make more than $100 million in illicit profits. The SEC has since recovered $53 million.
UK: RED DIESEL CALL FOR EVIDENCE ROUNDTABLE HELD WITH INDUSTRY LEADERS
DEFRA on 10th July reported that Environment and Treasury Ministers met with industry representatives to discuss the call for evidence on red diesel – seeking views on whether red diesel for non-road mobile machinery discourages the purchase of cleaner alternatives. The marked gas oil (also used for agricultural and horticultural purposes and by fishing vessels) enjoys a considerably lower rate of excise duty than road-fuel. Although it is often thought red diesel is mainly used in the agricultural sector, 75% of it is used across a range of other industries, including rail, shipping and in construction, mining and airport support vehicles. It also costs the public purse £2.4 billion each year, compared to if duty was charged at the main rate. The consultation period ends on 24th July.
POLISH COURT UPHOLDS ONLINE GAMBLING BLACKLIST
Calvin Ayre on 11th July reported that Poland’s online gambling blacklist has been upheld by a local court as permissible under the country’s gambling laws. The blacklist had been challenged by a number of unspecified international online gambling operators who argued that the Ministry of Finance had no right to besmirch their good names by adding their domains to the blacklist without a court order.
GAMBLING COMMISSION IMPOSES £2 MILLION PENALTY PACKAGE ON 32 RED
CMS Law on 10th July published an article saying that on 20th June, the Gambling Commission announced it had reached a regulatory settlement with 32Red Limited in respect of weaknesses found in its responsible gambling and AML controls. As part of the settlement, 32Red will pay a penalty package of £2 million, including a £709,046 divestment of financial gain, £1.3 million payment in lieu of a financial penalty and £15,000 towards investigatory costs. It says that the settlement is yet another example of the Commission exercising its powers under its revised – and more stringent – enforcement policy, adding to an ever-increasing list of high profile and large scale regulatory settlements. The article provides detail of the case.
NEW CRIME BOSS CONSOLIDATES POWER ON BRAZIL-PARAGUAY BORDER
Insight Crime on 10th July carried a report on the presence of a new Brazilian crime boss operating on the border with Paraguay that illustrates the sophisticated expansion strategy of Brazil’s most powerful gang (Primeiro Comando da Capital or PCC) and the important role the border region plays in transnational organised crime. Criminals from Brazil and other countries take refuge the border region because it serves as a strategic location for continuing criminal activities while evading justice in their home countries.
A NEW INTELLIGENCE ECOSYSTEM TO FIGHT TERRORISM AND ORGANISED CRIME
The EU Community Research and Development Research Service (CORDIS) has published an article saying that while organised crime and terrorist groups are often at the forefront of technological innovation for planning, executing and concealing their criminal activities, law enforcement agencies lag behind when tackling criminal activities. On 20th-21st June, researchers from 16 different organisations (from law enforcement, academia, industry, legal, ethics and privacy committees) in 13 European countries met in Madrid to launch the EU-funded COPKIT project which aims to create an intelligence and knowledge ecosystem for law enforcement. The event reviewed the objectives and structure of the project, including management, internal procedures, external advisory boards and law enforcement involvement. The meeting was also dedicated to ethics, privacy and data protection.
VAT FRAUDSTER TO PAY £98,000 FOR FACE ANOTHER 12 MONTHS IN PRISON
On 11th July, Accountancy Daily reported that Herbert Makrides, of Stoke-on-Trent, who was jailed for 16 months in April 2017 for laundering more than £270,000 received from VAT repayment frauds involving 20 sham companies and was also disqualified from being a company director for 5 years, has been ordered to pay back £98,530 within 3 months or serve an additional 12 months in prison and still owe the money.
PODCAST: “BAD BLOOD” – THE THERANOS SCANDAL
In the latest TRACE podcast, two-time Pulitzer Prize winner John Carreyrou discusses his excellent book about the Theranos scandal, “Bad Blood”, and how Elizabeth Holmes conned everyone. She raised money from investors “through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance”, according to the SEC. Theranos was a Silicon Valley start-up once valued at as much as $9 billion, with Holmes worth $5 billion. It was formed in 2003 by then 19-year-old Elizabeth Holmes, who dropped out of Stanford University to launch the company. It aimed to create cheaper, more efficient alternatives to traditional medical tests.
For more information, see –
TRADE MARKS: PARALLEL IMPORTS OF MEDICAL DEVICES
On 11th July, Bird & Bird published a briefing about an European Court of Justice (ECJ) case in which it held that a parallel importer does not repackage a medical device by adding a small label next to the original branding on an unopened box. The ECJ confirmed that trade mark owners cannot oppose a parallel importer’s further commercialisation of a medical device in its original packaging if the additional labelling added by the importer does not threaten the medical device’s guarantee of origin. In this case, whilst relabelling may constitute repackaging, the additional labelling added was not a repackaging, because the original presentation of the packaging of the medical device had not been altered – and hence it did not meet the guidelines set down in the previous cases involving Bristol Myers-Squibb and Boehringer Ingelheim.
ISLAMIST MILITANT ACTIVITY ON THE RISE IN AFRICA
Defence Web on 11th July carried an article about a report published in June by the Africa Centre for Strategic Studies saying that militant Islamist groups in Africa have been growing over the last decade, with violent events up dramatically since 2010, including fatalities. There are more militant groups than ever, but al Shabaab is responsible for most violence. The report provides a snapshot of violent episodes involving Islamist groups in Africa since 2010. The Centre said that over the course of the past 8 years, there has been a 310% increase in violent events (from 675 in 2010 to 2 769 in 2017) and as these episodes include attacks initiated by security forces, this figure also captures the growing military responses to militant Islamist activity over the 8-year period. The number of African countries experiencing sustained militant Islamist group activity has grown to 12 – Algeria, Burkina Faso, Cameroon, Chad, Egypt, Kenya, Libya, Mali, Niger, Nigeria, Somalia, and Tunisia. In 2010, there were just 5 -Algeria, Mali, Niger, Nigeria, and Somalia. The number of active groups has also grown steadily. In 2010, there were 5 recognised militant Islamist groups operating on the continent – al Qaeda (in Egypt and Libya), al Qaeda in the Islamic Maghreb (AQIM), al Shabaab, Hizbul Islam, and Boko Haram. By end of 2017, the number was over 20. Militant Islamist activity has been focused in five main regions: Mali, the Lake Chad Basin, Somalia, the Maghreb, and the Sinai Peninsula.
The report, and useful infographic, can be found at –
POLICE AND CRIMINAL EVIDENCE ACT 1984 (PACE) CODES OF PRACTICE
On 11th July, the Home Office provided updated versions of all 8 Codes of Practice following the recent amendment of 4 of them, the amendments coming into force on 31st July. The news release also provided links to previous versions of the codes are shown below, and the dates on which they came into force.
WHERE IN AFRICA IS ORGANISED CRIME MOST SERIOUS?
Defence Web on 11th July says that researchers on organised crime are often asked where in Africa the problem is most serious – implicit in the question is which countries should be prioritised in order to address the problem; the question is fair, but hard to answer. It says that, broadly, Africa has 4 types of organised crime. They are all evolving in different ways – and there is some overlap between them. The article is based on a report from the Institute for Strategic Studies, which says that the key issue is not the size of illicit markets, but where the state’s response is weakest. The article says that the future of organised crime in Africa will be a combination of the 4 typologies detailed in the article.
POLICE IN SPAIN AND COLOMBIA BREAK UP MONEY-LAUNDERING RINGS
The Washington Post on 11th July said that Europol says it helped police in Spain and Colombia break up 2 gangs engaged in large-scale money laundering involving around 2.5 million. It says the gang laundered money by converting large amounts of cash into cryptocurrencies, such as Bitcoins and Altcoins, or by “smurfing” — a term for splitting illicit proceeds into small remittances. One of the gangs operated from various locations in Spain and France. The other network was based in Madrid. The 23 arrested were mostly from Spain, Colombia and Venezuela.
TAIWAN “CIVIL GOVERNMENT” – ARREST, JAILING OF LEADERS AND SEIZING OF MONEY
OpEd News on 11th July reported that Roger and Julian Lin and 5 other leaders of Taiwan Civil Government – which describes itself as an educational and advocacy group led by respected business leader Dr. Roger Lin – were arrested in May and its “war chest” of $4.3 million was seized. The 3 remain in jail and the group low on cash. There was also speculation that the suspects might be charged with national security offences for claiming that the Republic of China government is not the legally recognised government of Taiwan, but prosecutors said that it was a fraud syndicate rather than a group intent on endangering national security or social stability.
PERTHSHIRE BANK WORKER ACCUSED OF £800,000 FRAUD
The BBC on 11th July reported that a bank worker is to stand trial accused of embezzling more than £800,000 from customers at his branch. Samuel Mackintosh, 27, is alleged to have stolen the money between March and August 2017 at the Bank of Scotland’s Auchterarder branch whilst working as a personal banking advisor.
THE ISLAMIC STATE AND DRONES: SUPPLY, SCALE, AND FUTURE THREATS
The CTC Sentinel at West Point on 11th July published a report evaluating the main factors that helped the Islamic State to effectively use modified commercial drones as weapons. It also highlights some of the broader threat and policy implications associated with the Islamic State’s pioneering use of drones, to include how the group — and its actions — could serve as an inspiration or model for other types of actors, to include nation-states or proxy groups that are developing their own hybrid warfare capabilities and strategies.
NEW US TASK FORCE ON MARKET INTEGRITY AND CONSUMER FRAUD
On 11th July, the US DoJ published a news release announcing a new Task Force on Market Integrity and Consumer Fraud. The Task Force will focus on combating fraud against consumers – particularly the elderly, service members, and veterans – and corporate fraud that victimises the general public and the government, saying that fraud committed by companies and their employees has a devastating impact on American citizens in the financial markets, the health care sector, and elsewhere. The Task Force will bring together US Attorneys’ Offices and other components of the DoJ, with essential help from other enforcement agencies, to fight fraud affecting US citizens.
SAUDI DEFENCE MINISTRY OFFICIAL ARRESTED FOR BRIBERY
OCCRP on 11th July reported that an unnamed official from the Saudi Arabian defence ministry was arrested on charges of bribery along with 2 other unnamed individuals.
TURKEY DETAINS MUSLIM TELEVANGELIST ON FRAUD CHARGES
The Digital Journal on 11th July reported that Turkish police have detained Adnan Oktar, a televangelist notorious for propagating conservative views while surrounded by scantily-clad women he refers to as his “kittens”. A total of 235 arrest warrants were issued and at least 166 people have been detained so far. NTV television said 100 of those detained are female.
1MDB: GERMAN EX-GOLDMAN PARTNER REPORTEDLY IN PLEA DEAL OVER MALAYSIAN SCANDAL
Handelsblatt on 11th July reported that Tim Leissner, a German national and partner at Goldman Sachs, is willing to co-operate with US investigators in exchange for a lesser charge has increased scrutiny on the New York investment bank and its alleged role in the 1MDB case.
COMPANIES OWNED BY GAZPROM ARMENIA SUSPECTED IN TAX EVASION
Armenpress on 11th July reported that the State Revenue Committee’s (SRC) supervision department has reported that it has conducted inspections in several companies owned by Gazprom Armenia which resulted in the discovery of major fraud. The SRC said it has probed Avtogaz LLC, Avtovtop, Gaom Group, Gaz Group, Arzni Gaz, Fakel Gaz and Nakhshin limited liability companies.
DANSKE BANK’S COMPLIANCE HEAD QUITS AFTER ‘INTENSE’ WORK OVER ESTONIA SCANDAL
RTE reported on 11th July that Anders Meinert Jorgensen, the head of compliance of Denmark’s biggest lender, Danske Bank, has announced his resignation, saying he was leaving following an “intense” period of work that was partly due to dealing with a money laundering scandal at the bank’s Estonian branch. The resignation adds to the list of top managers exiting after Danske Bank admitted to flaws in AML controls in Estonia.
GLENCORE TO CO-OPERATE WITH US CORRUPTION INVESTIGATION
Globe & Mail in Canada reported on 11th July that Glencore Plc has said it would co-operate with US authorities after they demanded documents about the mining firm’s business in DRC, Venezuela and Nigeria as part of a corruption investigation. The company said it had set up a committee of board members, including Chairman Tony Hayward and independent non-executive directors to oversee its response to the subpoena from the DoJ.
EU ACTIONS TO COUNTER DA’ESH
The EU External Action Service, on 11th July, published details of actions taken to counter the threat from Da’esh. This included co-operation with Middle East and North Africa states, and transposing into binding EU law UN Security Council Resolution 2253/2015, which prohibits making economic resources available to Da’esh. This prohibition applies to both direct and indirect trade in oil.
INITIATIVE TO CONTROL SMALL ARMS AND LIGHT WEAPONS IN THE WESTERN BALKANS
On 11th July, the UK Foreign and Commonwealth Office published a French- and German-led roadmap roadmap adopted by regional ministers of interior and foreign affairs to address the illegal possession, misuse and trafficking of firearms and their ammunition. It aims to put in place comprehensive and sustainable mechanisms, fully harmonised with European and other international standards, to identify, prevent, prosecute, and control the illegal possession, misuse and trafficking of firearms, ammunition and explosives. This, it says, will make the Western Balkans a safer region, and an exporter of security (by 2024). The goals of the roadmap are –
GOAL 1. By 2023, ensure that arms control legislation is in place, fully harmonized with the EU regulatory framework and other related international obligations and standardized across the region.
GOAL 2. By 2024, ensure that arms control policies and practices in the Western Balkans are evidence based and intelligence led.
GOAL 3. By 2024, significantly reduce illicit flows of firearms, ammunition and explosives (FAE) into, within and beyond the Western Balkans.
GOAL 4. By 2024, significantly reduce the supply, demand and misuse of firearms through increased awareness, education, outreach and advocacy.
GOAL 5. By 2024, substantially decrease the estimated number of firearms in illicit possession in the Western Balkans.
GOAL 6. Systematically decrease the surplus and destroy seized small arms and light weapons and ammunition.
GOAL 7. Significantly decrease the risk of proliferation and diversion of firearms, ammunition and explosives.
LIBYAN FRAUD JUDGMENT A ‘STEP FORWARD’ IN GLOBAL CORRUPTION FIGHT
The Law Society Gazette on 11th July reported on a case where a fund management company has secured victory in a 4-year legal fight against its former CEO, who was accused of receiving bribes totalling around £18 million from a Libyan sovereign wealth fund and using them to bankroll a lavish lifestyle and had been accused of defrauding the company by conspiring with another employee to divert funds to offshore accounts. At the time, in 2009, in 2009, the firm was managing a £441 million sovereign wealth fund, the Libya Africa Investment Portfolio (LAP).
UK INSOLVENCY SERVICE ENFORCEMENT OUTCOMES: 2018/19
On 11th July, the Insolvency Service published statistics on new outcomes resulting from the enforcement activities of the Insolvency Service, including disqualifications of company directors; companies wound up in the public interest; bankruptcy restrictions.
NEW YORK COURT ORDERS BINARY OPTIONS, BITCOIN FRAUDSTERS (INCLUDING UK COMPANY) TO PAY MONETARY PENALTY OF $1.5 MILLION
Finance Feeds on 11th July reported that the defendants – Dillon Michael Dean and The Entrepreneurs Headquarters Limited (TEH), a UK company, are accused of running a binary options and Bitcoin scam in the US.
BIBA URGES FCA TO BE “QUICKER OFF THE MARK” IN TACKLING ONLINE FRAUD
Insurance Age on 11th July reported that the British Insurance Brokers’ Association (Biba) has urged the FCA to act faster to stop fraudulent activity online, following the news that the FCA had failed to stop a clone broker on Facebook.
SOUTHPORT CARE HOME BOSS EXPOSED AS FRAUDSTER WHO STOLE MILLIONS FROM PENSIONERS
The Liverpool Echo on 11th July reported that David Barton, 64, befriended then betrayed his wealthy victims at luxurious Barton Park Nursing Home in Southport. He got away with his brazen crimes for 18 years, but was finally caught out due to his “extraordinary greed”.
EU: ADDITIONAL 25% IMPORT DUTY ON US SUPERYACHTS
Superyacht News on 11th July reported that, as of 26th June, superyachts from the US that are being imported into EU will be required to pay an additional 25% customs duty under CPC Codes 8903 9110 – sailings yachts with or without auxiliary engine and
8903 9210 – motor yachts.