18th July 2018
PARLIAMENTARY COMMITTEE CALL FOR ARMS TRADE LOOPHOLES TO BE CLOSED
The National in Scotland on 18th July reported that a report by Westminster’s Committees on Arms Export Controls says no audits are carried out on whether or not UK companies comply with arms laws overseas, and that this must change “as soon as practically possible” to combat corruption and ensure usage does not break British law. It also said that rules for brokers are said to be “significantly more stringent” in the US and in 23 EU member states, with the Government advised to consider setting up a new “fit and proper person” test to establish whether intermediaries are right for the role.
MIGRANTS IN LIBYA FACE RISING THREAT FROM ‘STRONGER’ GANGS, TRAFFICKERS
VoA on 17th July reported that migrants in Libya face the greatest danger in years of being trafficked, exploited or enslaved by armed groups and criminal gangs — which are becoming stronger — as Europe clamps down on migration, the UN and analysts said. Rising numbers of migrants trapped in Libya are prey to smugglers and traffickers and sold for labour, said the UN International Organization for Migration. It is said that many people in Libya become smugglers because the networks are well established and unlikely to be dismantled or prosecuted, as well as due to a lack of other sources of income.
10 BUSINESSMEN ARRESTED IN CHINA FOR SMUGGLING ACROSS THE BORDER WITH NORTH KOREA
Dong a-Ilbo in South Korea reported on 18th July that the Chinese government recently arrested 10 local businessmen, who engaged in smuggling activities across its border with North Korea. A source is quoted saying that it appears the Chinese authorities, which had condoned smuggling activities across the China-North Korea border after the bilateral relations began improving from a few months ago, have changed the guidelines on how to handle smuggling activities.
FATF CONSULTS ON DRAFT RISK-BASED APPROACH GUIDANCE FOR THE SECURITIES SECTOR
Shearman & Sterling reported on 17th July about FATF having published on 6th July a consultation draft of Risk-Based Approach Guidance for the securities sector. It says that FATF is also hoping that the draft Guidance will aid the development of a common understanding of what the risk-based approach to AML/CTF entails in the context of the securities sector. FATF is seeking feedback on the draft Guidance by 17th August.
US SENATORS CALLS FOR GAO REVIEW OF FEDERAL ATTEMPTS TO STOP TRADE-BASED MONEY LAUNDERING
The Ripon Advance in Washington DC reported on 17th July that a member of the US Senate Finance Committee, has requested a US Government Accountability Office (GAO) review that evaluates the federal government’s efforts to end and prevent trade-based money laundering (TBML), described as one of the main methods by which drug traffickers, criminal organisations and terrorist financiers use a legitimate trade to disguise illegally obtained proceeds. TBML is said to have contributed significantly to the ongoing opioid crisis in the US, according to Sen. Cassidy and Sen. Sheldon Whitehouse, who serves on the Senate Judiciary Subcommittee on Crime and Terrorism. Their goal in requesting a GAO review, the members wrote, is to improve co-ordination and communication between federal agencies in fighting TBML. The senators want the GAO to assess what steps FinCEN and other federal agencies have taken to address TBML; their level of attention given to fighting the crime, such as whether the illegal method is considered a priority or just handled when agencies learn about isolated cases when going after the money, drugs or criminals and to what extent FinCEN and other federal agencies collaborate and share data and information related to detecting and deterring TBML, including with international trading partners and the role shell companies play in facilitating the process; and the existing challenges regulators and law enforcement face when trying to determine ownership of shell companies.
MOBILE GAMES MONEY LAUNDERING OPERATION
The Bleeping Computer website on 17th July carried an article saying that the US DoJ, Apple, and game maker Supercell, have been warned of a money laundering ring that uses fake Apple accounts and gaming profiles to make transactions with stolen credit/debit cards and then sells these game premiums on online sites for the group’s profit. It is said that criminals targeted mobile games such as Supercell’s Clash of Clans, Supercel’s Clash Royale, and one game by Kabam named Marvel Contest of Champions and used stolen credit card details. It is also reported that the system made use of lax verification measures for the system that adds payment card data to iOS accounts.
KENYA NAMED AMONG WORLD’S BIGGEST TAX HAVENS WHERE THE RICH HIDE WEALTH TO EVADE TAXES
Tuko in Kenya reported on 17th July that a July 2018 report by the Tax Justice Network has revealed Kenya is now one of the biggest tax havens for the rich who are seeking to keep their offshore financial activities secret to evade high taxes in their jurisdictions. Read more:
WCO PUBLISHED GLOBAL STANDARDS ON E-COMMERCE
On 18th July, BIFA reported that on the 10th July, the World Customs Organisation published the Framework of Standards on Cross-Border E-Commerce as adopted at the end of June 2018 by its Council, together with a Resolution aimed at ensuring its harmonised and effective implementation. The Framework sets out baseline global standards on cross-border e-commerce. The core is the exchange of advance electronic data for effective risk management and enhanced facilitation of growing volumes of cross-border small and low-value B2C and C2C shipments, and the adoption of simplified procedures with respect to clearance, revenue collection and return, among other things, in close partnership with e-commerce stakeholders. It also encourages the use of non-intrusive inspection (NII) equipment, data analytics and other cutting-edge technologies to support safe, secure and sustainable cross-border e-commerce. The Framework is intended for Customs administrations wishing to develop legislative and operational frameworks for cross-border e-commerce.
CONFESSED PONZI PERP IN DENVER CHARGED WITH WIRE FRAUD
CBS Denver on 17th July reported that Dan Rudden, 71, established a business in 2000 called Financial Visions, helping finance cemeteries and funeral homes across the country. Rudden said for years, the business was a huge success yielding 12% returns for investors. In a “confession” to CBS TV, he said in about 2010, the business model decayed and morphed into a Ponzi scheme with money from new investors being used to pay dividends to old investors. Rudden said despite what some investors might suspect, there is no money to return. He says he didn’t blow the money on gambling or yachts or extravagant living, but on a business model that couldn’t be sustained. Rudden had said he believed he had taken his investors for $55 million but has subsequently said that he believed the amount was likely much less, but he wasn’t sure what it was and was still likely in the millions.
TUNISIA APPROVES ILLEGAL ENRICHMENT LAW TO COMBAT CORRUPTION
Middle East Eye on 17th July reported that the Tunisian parliament has approved a law to combat illicit enrichment, a step designed to strengthen the government’s fight against widespread corruption in the country. The law will force the president, ministers, senior officials in the public sector, independent bodies, banks, judges, security forces, journalists and unions to declare their property. The penalties include fines and imprisonment for 5 years. Last year, the government confiscated property and froze bank accounts of about 20 prominent businessmen arrested on suspicion of corruption in an unprecedented government campaign against graft. Tunisia’s anti-corruption committee says graft is still widespread and threatens Tunisia with billions of dollars a year in losses and that corruption had spread in all sectors including security, public tenders and health.
EX-NEW YORK SENATOR AND SON CONVICTED OF BRIBERY AND EXTORTION
ABC News Channel 20 on 17th July reported that Dean Skelos and his son, Adam, were accused of selling the once-powerful Republican’s office by pressuring wealthy businessmen into giving Skelos’ son roughly $300,000 for no-show jobs. Prosecutors said the payments were bribes intended to win support for legislation favoured by the businesses.
GUIDE FOR CHARTERED ACCOUNTANTS ON BREXIT
ICAEW and Chartered Accountants Ireland have produced a joint guide designed to help chartered accountants support businesses in the UK and Ireland to deal with the trading landscape after Brexit. The guide has a particular focus on trading between the UK and Ireland but the principles in the guide also apply to trade between the UK and the rest of the EU. It is aimed particularly at businesses with no previous experience of customs formalities.
THE ‘VIRTUAL KIDNAPPING’ SCAM THAT HAS FLEECED AUSTRALIANS OUT OF $10 MILLION
Mail Online on 18th July reported that an elaborate phone scam involving calls from the “Chinese Embassy”, arrest threats and ‘virtual kidnappings’ has fleeced countless unwitting victims out of an estimated $10 million in Australia. Hundreds of Australians have been swindled by the scam in the past year alone, willingly handing over an average $38,000 each to persuasive cyber criminals. And some people are even doing it to their own families in a desperate bid for cash.
CONCERNS OVER NUMBERS OF UK SHIPPERS SIGNED UP FOR “TRUSTED TRADER” STATUS
Loadstar on 17th July reported that supply chain concerns have arisen over its references to “trusted traders” and the UK’s apparent lack of them. Linked to post-9/11 security concerns, “trusted trader” programmes were developed to provide joined-up security and customs processes across the global supply chain – under EU (and UK) law these are called authorised economic operators (AEO). It reports that a spokesperson from the British International Freight Association (BIFA) told The Loadstar references to trusted traders meant “nothing”, as there were so many schemes available – there differing kinds under the AEO arrangements, and other schemes in different countries – for example, Australia, South Korea and the US. Without mutual recognition AEO status would be of little value, and it could only be achieved through a full agreement with the EU.
THE POWER OF THE POLICE TO ARREST INDIVIDUALS WHO ARE NOT ACTING UNLAWFULLY
The UK Police Law Blog on 15th July reported a recent High Court decision that confirms the power of the police to arrest individuals who are not acting unlawfully. It relies on the earlier case of CPS v McCann  which held that an arresting officer was acting in the execution of their duty when making an arrest notwithstanding that their suspicion that that offences were being committed being mistaken. A police officer does not have to tell the person the offence for which they are being arrested – rather than telling them the act for which they are being arrested. He or she may act to prevent crime even where no unlawful act is being committed or where they have no specific and correct criminal offence in mind.
HOW AND WHERE ORGANISED CRIME PREYS ON MIGRANTS IN MEXICO
Insight Crime on 17th July carried an article about a new report from the University of Texas at Austin’s Robert Strauss Center for International Security and Law, titled “Organized Crime and Central American Migration in Mexico” which shows how and where organised crime groups victimize Central American migrants in Mexico. According to the report, migrants from Central America face 3 types of criminal actors: local actors, gangs and transnational criminal organisations. More sophisticated organised criminal groups like the Gulf Cartel and the Zetas charge taxes for migrants to pass while also running their own migrant kidnapping or smuggling rings, in addition to attacking those traveling through Mexico. The report found that kidnapping is the most lucrative crime committed and is predominantly carried out by transnational criminal organisations, which can earn up to $5,165 per migrant and up to $20.5 million annually from kidnapping. However, the website says that the report misses a key actor in its analysis: the Mexican state and this could be explained, in part, by the fact that the report was done “in response to a request” from the Mexican Federal Police.
TRUMP ADMINISTRATION RELEASES ANNUAL LIST OF COUNTRIES RECRUITING AND USING CHILD SOLDIERS
On 17th July, the Stimson Center reported on the release on 28th June by the US State Department of its Trafficking in Persons (TIP) report which includes an updated list of states involved in child soldier recruitment and/or use by 11 governments (as required by the Child Soldiers Prevention Act or CSPA, which includes Burma (Myanmar), the Democratic Republic of Congo (DRC), Iran, Iraq, Mali, Niger, Nigeria, Somalia, South Sudan, Syria, and Yemen. Of the 11 countries identified on the 2018 CSPA list, 7 are due to receive some form of US military assistance in fiscal year 2019. Before October 1st, President Trump has to make his determinations as to whether to employ national interest waivers to exempt any of the 11 countries identified.
The Trafficking in Persons Report 2018 is available at –
YAKUZA READY TO MUSCLE IN ON CASINO BUSINESS IN JAPAN, GANGSTER REVEALS
The Asahi Shimbun on 18th July reported that Yakuza organized crime groups are plotting to infiltrate casinos if legislation to allow them passes in the Diet, a gang member has admitted to The Asahi Shimbun. The law will for the first time allow private companies to operate legalised gambling in the form of casinos, but criminal organisations are also poised to enter the lucrative markets of constructing and operating casinos at “integrated resorts”.
ACQUITTAL OF FORMER SPECIAL FORCES MEMBERS IN SERBIA
Janes.com on 17th July reported that the Higher Court in Belgrade acquitted 7 former members of a disbanded special forces unit (Jedinica za specijalne operacije: JSO) of armed mutiny in 2001. JSO members had refused orders and blocked the main highway running through Belgrade in protest against a criminal procedure code that facilitated the extradition of war crimes suspects to the International Criminal Tribunal for the Former Yugoslavia (ICTY). Janes.com suggests the result is indicative of judiciary’s politicisation and corruption, which is likely preventing investigation of politicians.
IRELAND: MAN ARRESTED IN RELATION TO LAUNDERING OF OVER €1.1 MILLION
On 18th July, Breaking News reported that a 33-year-old man had been arrested in Dublin by members from the Money Laundering Investigation Unit at the Garda National Economic Crime Bureau in relation to the laundering of funds in excess of €1.1 million. The alleged laundered funds were the proceeds of an International Invoice Re-Direction Fraud perpetrated against a Danish company in 2016.
UK PENSION COMPANY LIQUIDATED OVER £4 MILLION ABUSE
Accountancy Daily reported on 18th July that a Kent pension company – Chartwell Trustee Pension Solutions Ltd, sole trustee of the Pinnacle Pension Scheme – has been ordered into liquidation at the High Court after an Insolvency Service investigation revealed it had abused over £4million of investors’ savings.
EU CAUTIONS MALAWI OVER CORRUPTION CRISIS, DEVELOPMENT FUNDS THREATENED
The Nyasa Times on 18th July reported that the outgoing EU representative in Malawi has urged to curb corruption, warning that continuing graft could affect EU funding.
ART AND THE BRAVE NEW POST-BREXIT WORLD
A post on the Art Law & More website from Boodle Hatfield on 18th July considers the possible consequences for the arts business after withdrawal. It points out that currently the UK sits just behind the USA and ahead of China in terms of volume of art sales with a 21% share of the global art market, though this figure represents an almost 10% decline over the past year. The post raises questions about the VAT position of imports post-Brexit and the current 5% rate; freedom of movement for members of the art world; and the future of the Artists Resale Right (which is levied on the sale of works by living artists or artists who have passed away within the last 70 years) and if it could or should be dropped if/when the UK leaves the EU.
BANKING, LENDING, AND INSOLVENCY RESTRICTIONS RELEGATE THE LEGITIMATE CANNABIS INDUSTRY IN CALIFORNIA TO AN ALL-CASH BUSINESS, VULNERABLE TO CRIME
On 17th July, the law firm Buchalter published an article from the July/August edition of Los Angeles Lawyer which highlights the difficulties faced by marijuana-related businesses (MRB) which, even after being legally established under state law and operating under strict regulations and oversight, nonetheless cannot open a simple deposit account at a bank owing to inconsistent, conflicting federal regulations. It says that, under the current federal prohibition of marijuana many banks, fearing potential repercussions, simply refuse to do business with marijuana growers, extractors, distributors, and sellers— even ones that operate legally in their own respective states. As a result, MRB are forced to operate on a cash-only basis, making them prime targets for robberies, kidnappings, and extortion.
US GOVERNMENT BAN ON DEALING WITH KAPERSKY LAB
Next Gov on 16th July reported that a new procurement rule now bars the Russian anti-virus company Kaspersky Lab or any of its partners or distributors from contracts at the Pentagon, General Services Administration or NASA, despite a last-minute Kaspersky effort to halt the ban. the ban was sparked by intelligence agencies’ allegation that Kaspersky executives are too closely tied to the Kremlin and the Homeland Security conclusion that a Russian cybersecurity law might compel Kaspersky to help Russian intelligence agencies spy on the US government. Kaspersky has consistently denied any undue influence by the Kremlin and said that Homeland Security is misreading the Russian law. The article says that Congress is likely to enact similar government-wide contracting bans targeting the Chinese companies Huawei and ZTE in the 2019 version of an annual defence policy Bill that’s currently at a House-Senate conference committee.
UAE TOPS LIST OF 84 MOST COMPLEX COUNTRIES FOR COMPLIANCE – IRELAND IS SIMPLEST
The Compliance Journal from Law.com on 18th July reported that the UAE is the most complex country for corporate compliance officers and lawyers to navigate, while Ireland is the least complicated, according to a new report from the TMF Group – which provides business advice and services to global companies. For its Compliance Complexity Index 2018 TMF surveyed compliance experts and lawyers who deal with 84 countries. The survey’s 52 questions included queries on the difficulty of opening an entity in a specific country and the complications in adopting both local and global transparency reporting requirements. Asia-Pacific had 3 countries in the top 10 list of the most complex – China, Malaysia and Vietnam; South America also had 3 in the top 10 – Argentina, Brazil and Uruguay. A copy of the report can be accessed via the article.
ARMENIA: LAW ENFORCEMENT AGENCIES LAUNCH PROBE AS FORMER POLICE CHIEF AND FORMER GOVERNOR START MUTUAL ACCUSATIONS OVER BRIBERY AND EXTORTION
On 18th July, Armenpress reported that a former Police Chief of Armenia, is claiming that the former Governor of Ararat province has extorted nearly $60,000 from him. The former Governor has claimed that in 2008 he had given the then the Police Chief, money to award a job to the son of a former employee of his in the police force but that did not provide the job nor return the cash. The Governor has not been named.
SWISS CLAIM SUCCESS IN INTERNATIONAL CYBERCRIME CASE
Swissinfo on 18th July reported that 2 people suspected of illegally obtaining and using the e-banking data of Swiss bank customers have been arrested in the Netherlands. The Swiss Office of the Attorney General says the suspects were arrested and premises were searched in the co-ordinated operation between Dutch and Swiss police and justice authorities.
FRAUDSTER ANTHONY KEMP JAILED OVER £8 MILLION INVESTMENT CON
On 18th July, the BBC reported that a man who played a key role in a fraud which targeted more than 350 elderly and vulnerable people has been jailed for 7 years. Anthony Kemp, 62, was part of a gang that fleeced victims over a 3-year period. The court heard Durham Police had been investigating the activities of Kemp and 2 others for 5 years. Victims who handed over large sums of money were told they would get access to high-yielding investments abroad.
TRANSPARENCY INTERNATIONAL GIVES BAHAMAS ZERO RATING ON INFORMATION ACCESS LAWS
The Nassau Guardian on 18th July reported that the Bahamas had received a 0% rating on the strength of its access to information legislation. The rating is included on a scorecard, assessing Bahamas’ current anti-corruption framework, based on specific indicators that are under goal 16 of the UN Sustainable Development Goals (SDG) – in 2015, world leaders gathered at the UN to adopt 17 SDG to achieve by 2030. The 0% score on access to information legislation is based on target 16.10, which sets out to “ensure public access to information and protect fundamental freedoms, in accordance with national legislation and international agreements”. While a revamped version of the Freedom of Information Act has been passed in February 2017, there have long been calls for it to be fully enacted. However, a 2017 corruption index published by Transparency International showed that the Bahamas was the top-ranking country in the Caribbean for the least amount of perceived corruption – at number 24 of 176 countries on the list, ahead of Barbados, which once topped the list for least corrupt country in the Caribbean basin.
FORGER BUILT MANSION IN ZIMBABWE WHILE RAKING IN THOUSANDS FROM FAKE MARRIAGES AND BENEFITS SCAM IN UK
The Express & Star on 18th July reported that Zimbabwe-born Clemence Marijeni, 44, has been jailed up for 17 years after producing fake documents for 2 huge West Midlands fraud rackets. The master forger behind one of the West Midlands’ largest sham marriage scams and a £720,000 maternity allowance fraud has been jailed for a total of 17 years. He completed a law degree at Wolverhampton University after coming to the UK in 2006 and claimed to earn £30,000-a-year from his role in a shipping business. But the graphics expert pocketed more cash by selling forged paperwork to others involved in the 2 frauds while using 8 bank accounts under false names to collect at least £55,000 from bogus maternity allowance claims for himself. The gang made at least 165 fake maternity applications between May 2011 and August 2015. Marijeni was a key player in the bogus marriage fraud, creating fake histories in a bid to help at least 45 West Africans to stay in the country illegally through bogus weddings. Czech and Slovakian people allegedly working and living in the UK were paid to tie the knot.
FUGITIVE WANTED IN CONNECTION WITH COCAINE JET SEIZURE IN UK TRACKED DOWN IN THAILAND
On 18th July, a news release from the NCA said that Spanish national Francisco Jesus Gutierrez Marcos, 36, a man wanted in connection with an alleged plot to smuggle around half a tonne of cocaine into the UK using a private jet has been arrested in Thailand. Living in Bournemouth, he had left the UK on the day of the seizure, which took place at Farnborough Airport on 29th January. The jet had flown direct from Bogota, Colombia and the drugs were found by Border Force officers inside suitcases transported on the aircraft.
SHIPPERS WELCOME NEW LIVERPOOL CONTAINER SERVICES
Lloyds Loading List on 18th July that cargo owners have welcomed new containership services to Peel Ports’ flagship deep-water container terminal, Liverpool2, which will welcome its largest regular caller to date when 2M alliance partners Maersk and MSC introduce a new transatlantic container service to the port from 22nd July.
DANSKE BANK TO FORGO ESTONIA MONEY LAUNDERING PROFITS
Law 360 on 18th July reported that Danske Bank said that it will waive income generated from transactions linked to alleged money laundering in Estonia and will donate the money to “combating international financial crime” once the full extent of the scandal becomes clear.
JERSEY BUSINESS TENDENCY SURVEY JUNE 2018
On 18th July, Jersey published the latest quarterly Jersey Business Tendency Survey (BTS) which provides timely, qualitative information about the Island’s economy.
INTERPOL SCREENS FOR TERRORISTS IN SUMMER TOURIST DESTINATIONS
OCCRP on 18th July reported that Interpol is helping local police in 8 Mediterranean seaports screen travellers and prevent potential terrorists from entering countries during the summer tourist season, the police agency said. In just the first week of “Operation Neptune”, 4 suspected foreign terrorist fighters and the location of 1 missing person were detected during 350,000 searches. The officers are checking travellers ID cards and passports against Interpol’s criminal databases which include stolen documents, often used by terrorists trying to move between countries.
DUTCH GOVERNMENT HIRES NEARLY 1,000 CUSTOMS OFFICIALS TO PREPARE FOR ‘NO DEAL’ BREXIT
The Independent on 18th July reported that the Dutch government has completed the hiring of nearly 1,000 new customs officers to prepare for a looming “no deal” Brexit, according to a senior official.
CHINA CUSTOMS INTERCEPT A MILLION TONNES OF ILLEGAL WASTE
The South China Morning Post on 18th July reported that the General Administration of Customs has made the crackdown on smuggled foreign waste one of its priorities for this year after China imposed bans on 24 types of recyclable material, including plastics. It says that it uncovered 276 cases of waste smuggling in the first half of the year, up 89% on the year and involving 987,900 tonnes of rubbish. One of the biggest cases involved the smuggling of 313,500 tonnes of steel slag by an unnamed Shanghai company, as well as a 200,000-tonne shipment of plastic and other solid waste intercepted by customs inspectors in Shantou.
REPORT TO US CONGRESS ON THE COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES (CFIUS)
On 17th July, USNI News published the 3rd July report on CFIUS, an interagency body original set up in 1975 and which comprises 9 Cabinet members, 2 ex-officio members, and other members as appointed by the President, that assists the President in overseeing the national security aspects of foreign direct investment in the US economy. The current debate over CFIUS reflects long-standing concerns about the impact of foreign investment on the economy and the role of economics as a component of national security. Some Members of Congress question CFIUS’s performance and the way the Committee reviews cases involving foreign governments, particularly with the emergence of state-owned enterprises. Changes in US foreign investment policy have potentially large economy-wide implications, since the US is the largest recipient and the largest overseas investor of foreign direct investment. The report notes that, to date, 5 investments have been blocked, although proposed transactions may have been terminated by the firms involved in lieu of having a transaction blocked. A recent example in 2018, was the blocked acquisition of Qualcomm by Broadcom. The report not only examines recent cases and discusses possible effects and changes, it also details the background and historical perspective of CFIUS, examines the foreign investment national security policies of other states, and discusses the growing importance of state-owned enterprises and economic and security concerns surrounding them.